Preamble

The House met at a Quarter before Three of the. Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

STAFFORDSHIRE ASYLUMS BILL,

Read the Third time, and passed.

PILOTAGE PROVISIONAL ORDERS (NO. 3) BILL,

"to confirm certain Pilotage Orders made by the Board of Trade under the Pilotage Act, 1913, relating to pilotage in the Pilotage Districts of Blyth and Buckie, and in those under the jurisdiction of the Corporation of the Trinity House of Newcastle-upon-Tyne," presented by Sir WILLIAM MITCHELL-THOMSON; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 101.]

TAXATION (PETITION).

Sir W. JOYNSON-HICKS: I beg leave to present a petition from the urban district council of Twickenham, calling attention to the burdens inflicted upon trade and commerce by the present high rate of taxation, and asking this honourable House to take such steps as they can to secure relief from such taxation.

Oral Answers to Questions — SAFEGUARDING OF INDUSTRIES ACT.

FABRIC GLOVES.

Mr. W. GREENWOOD: 2.
asked the President of the Board of Trade the value of Egyptian yarns over 40s.-counts exported from Lancashire to Germany in
the year 1921; the value of fabric gloves exported from Germany to this country in 1921; and the value of the total of the exports of fabric gloves from Germany to all countries in 1921?

The PRESIDENT of the BOARD of TRADE (Mr. Baldwin): Separate particulars of exports of cotton yarns spun from Egyptian cotton are not available. In the year 1921 the value of gloves of woven fabric other than silk imported into the United Kingdom registered as consigned from Germany was£110,576. Fabric gloves are not separately recorded in the German official trade returns relating to 1921 so far published, and I am, consequently, not in a position to state the value of the exports of such gloves from Germany during that year.

Mr. GREENWOOD: Is it not a fact that the total exports of cotton of that nature represents a value of over£12,000,000?

Mr. BALDWIN: I have no information.

Sir WILLIAM SEAGER: 4.
asked the President of the Board of Trade whether the Committee which dealt with the scheduling of glove fabric and fabric gloves under the Safeguarding of Industries Act has yet submitted its Report to the Board; if so, will the Government make an official statement immediately as to whether the industry is, or is not, to be safeguarded against dumping; whether it is realised that, as a result of this delay, foreign exporters have pressed large supplies of fabric gloves on the British market since December; that the number of employés engaged in this country is now less than one-third of the total of two or three years ago; and that manufacturers are at a loss to know what to do in the circumstances?

Mr. BALDWIN: The answer to the first part of the question is in the affirmative. The position as regards imports of fabric gloves and as regards employment in the industry in this country is generally as stated in the question. As regards the second part of the question, I cannot at present add anything to the statement I made in the House on the 12th April.

Sir W. SEAGER: Will the right hon. Gentleman consider the safeguarding of this industry and so prevent further unemployment?

Mr. G. TERRELL: When does the right hon. Gentleman propose to make a statement with regard to this particular industry; and is he aware that on 20th March last he promised that a statement should be made before Easter.

Mr. BALDWIN: I hope that I shall be able to make a statement before long.

Captain WEDGWOOD BENN: Can the right hon. Gentleman tell us clearly and explicitly the reason for the delay?

Mr. REMER: Is it not a fact that the Committee reported, over three months ago? Is the right hon. Gentleman not aware that there is great unemployment in this trade, and in these circumstances will the Government come to a quick decision?

Mr. HURD: How many of the unemployed in the fabric gloves trade are in receipt of unemployment doles?

Mr. GREENWOOD: 23.
asked the President of the Board of Trade the numbers of persons unemployed of those normally engaged in the fine-cotton spinning industry in Bolton, and the number at present unemployed of those who three years ago were engaged in making fabric gloves in this country?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Sir Montague Barlow): I have been asked to reply. I regret the available statistics do not enable me to give the information desired by my hon. Friend.

Oral Answers to Questions — LENSES.

Mr. KILEY: 9.
asked the President of the Board of Trade whether cheap lenses imported for use with pocket lamps are held by his Department to be liable to key industry duty; and, if so, on what grounds, seeing that they are not optically worked and do not bear any commercial comparison with the superior type of ground lenses which are produced by skilled workers in this country and which would in no case be purchased for use in the connection indicated?

Mr. BALDWIN: The hon. Member appears to be under a misapprehension. Cheap lenses of the type ordinarily used in pocket lamps are not made of optical
glass and are not worked; and accordingly they are not dutiable under Part I of the Safeguarding of Industries Act. Lenses of better quality are also sometimes used in pocket lamps, and these, when worked, are subject to duty.

Mr. KILEY: Could the right hon. Gentleman not give instructions to His Majesty's officers of Customs to prevent the annoying delays that are now taking place?

Mr. BALDWIN: I am not aware of any annoying delays, but I will look into the matter.

Oral Answers to Questions — WIRE NAILS.

Mr. HOGGE: 10.
asked the President of the Board of Trade whether he is aware of any price-fixing arrangements being in force amongst the manufacturers comprising the association which is seeking protection against importations of wire nails from Germany; and, if so, whether these have been taken into account by him in referring the complaint to a Committee under Part II of the Safeguarding of Industries Act?

Mr. BALDWIN: I have no information as to any agreements of the kind suggested by the hon. Member. In any event, I do not think their existence would be a reason for refusing to refer to a Committee of Inquiry under the Safeguarding of Industries Act a complaint in accordance with the provisions of that Act.

Mr. C. WHITE: 14.
asked the President of the Board of Trade what quantity of wire nails were imported into this country during the six months ended 31st March; what proportion of the total amount came from Germany; and can he give the figures showing the quantity and value imported during the year 1913?

Mr. BALDWIN: The answer can most conveniently be given in the form of a table which, with the permission of the House, I will have printed in the OFFICIAL REPORT.

Following is the table promised:

The following statement shows the quantity and value of wire nails registered during the under-mentioned periods as imported into the United
Kingdom, distinguishing the imports from Germany:


——
Quantity.
Value.


(a) Imports of Wire Nails (including Staples).



Tons.
£


Six months ended March, 1922:


Imported from All Countries
22,186
417,412


Imported from Germany
5,402
86,007


(b) Imports of Wire Nails.



Tons.
£


Year 1913:


Imported from All Countries
50,248
504,191


Imported from Germany
19,959
196,711

Oral Answers to Questions — ALUMINIUM AND ENAMELLED HOLLOW-WARE.

Mr. HOGGE: 12.
asked the President of the Board of Trade whether his attention has been called to the fact that, since the Safeguarding of Industries Act Committee held its public inquiry regarding imported aluminium and enamelled hollow-ware, market conditions have so far changed that the British articles are on the average now cheaper than the German and are commanding a much readier sale; and whether he will make a special endeavour to obtain information on this point before deciding what action he will take on the Report presented to him by the Committee in question?

Mr. BALDWIN: The answer to the first part of the question is in the negative; if, however, the hon. Member can furnish me with any specific information of the kind indicated I shall be prepared to consider it.

Oral Answers to Questions — PART II.

Mr. G. TERRELL: 21.
asked the President of the Board of Trade if he can state the industries to which the committees appointed under the Safeguarding of Industries Act have recommended that Part II of the Act should be applied; and what action he proposes to take in the matter?

Mr. BALDWIN: I hope to be in a position to make a full statement on this subject at an early date.

Mr. TERRELL: Can the right hon. Gentleman not make a definite statement to-day, and, if not, may I repeat my question next Thursday?

Mr. REMER: Does the right hon. Gentleman intend to make a statement on this question within the next month?

Mr. TERRELL: Can the right hon. Gentleman give us a definite date?

Oral Answers to Questions — AGRICULTURAL PRODUCE.

Mr. C WHITE: 22.
asked the President of the Board of Trade whether his attention has been called to a resolution passed by the National Farmers' Union to the effect that Part II of the Safeguarding of Industries Act should be amended so as to bring agricultural produce within its scope or, in the alternative, that the Act shall be repealed as a preliminary to the consideration, de novo, of the best means of promoting the internal trade of the country, bearing in mind the essential value of agriculture to the community, so as to increase industrial stability and thus mitigate the asperities of depression of trade; and is he prepared to receive a deputation on the subject?

Mr. BALDWIN: The answer to the first part of the question is in the affirmative. As regards the second part, I am in communication with the Minister of Agriculture, to whom a similar request has been addressed.

Mr. WHITE: Will the right hon. Gentleman answer the last paragraph as to whether he is prepared to receive a deputation on the subject?

Mr. BALDWIN: I think my answer covers that point. I am communicating with the Minister of Agriculture on that subject.

Mr. KILEY: May I repeat the question this day week?

Oral Answers to Questions — ADMINISTRATION (COST).

Mr. KILEY: 95.
asked the Financial Secretary to the Treasury if he can state approximately the cost incurred in connection with the administration and defence of the Safeguarding of Industries Act up to 31st March, including overtime allowances and the engaging of experts, counsel, shorthand writers, etc.?

The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young): The work is mainly done as part of the normal functions of the Departments concerned, and it is impossible to give a separate figure of the cost. The identifiable expense does not exceed about£2,000.

Oral Answers to Questions — MEAT SUPPLY (ARGENTINE).

Mr. L'ESTRAMGE MALONE: 3.
asked the President of the Board of Trade whether his attention has been drawn to recent statements in the Press regarding the activities of the American and other meat firms that control the supply of meat from the Argentine to Smithfield Market; whether, in view of the importance to the public, he will cause an inquiry to be held, open to the public, to investigate the doings of the big American meat firms in this country, and also the position of the meat markets in London; and whether he will consider the advisability of following the example of the self-governing Dominions and other countries, and taking such action as the Committee of Inquiry may recommend?

Mr. BALDWIN: With regard to the first part of the question, I would refer the hon. Member to the reply given on 10th April to a similar question by the hon. Member for Central Southwark. In view of the Report in 1920 of the Sub-Committee appointed by the Standing Committee on Trusts, I do not consider that it is necessary to incur the expense of another investigation at the present moment. The third part of the question, consequently, does not arise.

Oral Answers to Questions — CUSTOMS TARIFFS.

Captain W. BENN: 5 and 6.
asked the President of the Board of Trade (1) whether the Government policy is that all Customs tariffs should be published in clear terms, as set forth in the London memorandum of the experts; whether in this event it is their intention to modify the German Reparations (Recovery) Act, under which the amount of duty payable cannot be determined without an examination of the value of the German constituents of an imported article;
(2) whether the policy of the Government was set forth in the London memorandum of the experts to the effect that within 12 months after substantial progress has been made in the restoration of a country's exchanges any special restrictions imposed on imports from that country on the ground of depreciated exchange should be removed; and whether, in this event, an amendment to the Safeguarding of Industries Act will be introduced?

Mr. BALDWIN: The hon. and gallant Member has correctly quoted the draft resolutions embodied in Articles 40 and 43 of the Report of the Economic and Financial Experts. The adoption of the latter Article would not necessitate the modification of the German Reparation (Recovery) Act. The effect of Order No. 11 made under that Act is that no examination of the German constituents of an imported article is required, as suggested in the question. Nor would the adoption of the first Article involve the amendment of the Safeguarding of Industries Act, Section 9 of which already provides for the revocation of Orders.

Oral Answers to Questions — PEACE TREATIES.

BRITISH LOANS (HUNGARY).

Sir CYRIL COBB: 7.
asked the President of the Board of Trade whether he is aware that the Hungarian Government in 1881, 1895, and 1914, and the City of Budapest in 1910 and 1914, borrowed in London from British subjects large sums of money and that the Hungarian Government and the authorities of the City of Budapest have defaulted on those obligations since the year 1914; whether he has succeeded in arriving at an arrangement in the interests of British creditors with the defaulting parties; and, if so, will he say what the terms of the proposed arrangement are?

Mr. ALFRED SHORT: 1.
asked the President of the Board of Trade what terms of agreement, if any, the British Government has made, or proposes to make, with the Hungarian Government for the purpose of securing the discharge to British subjects of Hungarian pre-War debts and obligations, both State and municipal?

Mr. BALDWIN: No specific agreement is required in so far as the claims referred to come within Article 231 of the Treaty of Trianon. A Convention has been concluded which permits British creditors to negotiate, subject to the consent of the Hungarian and British Clearing Offices, private agreements with their Hungarian debtors for the direct settlement of the debts owing to them. It is understood that the British holders of City of Budapest Municipal Loan have deputed the Council of Foreign Bondholders to
negotiate on their behalf a settlement of this kind with the Hungarian authorities concerned.

Oral Answers to Questions — GERMAN WAR CRIMINALS (TRIAL).

Sir JOHN BUTCHER: 25.
asked the Prime Minister whether he is now in a position to publish the Report made in January last by the committee of lawyers who were appointed in August last by the Supreme Council to report on the trial of German War criminals at Leipzig; whether he can state what reason, if any, exists why these War criminals should not forthwith be tried in accordance with the Treaty of Versailles; and whether, in view of the unsatisfactory character of the Leipzig trials and the long delays which have taken place, the trial of these War criminals in accordance with the Treaty may be shortly expected?

Mr. CHAMBERLAIN (Leader of the House): The answer to the first part of the question is in the negative. The matter is still under discussion between the Allied Governments concerned. The points raised by the second and third parts have not yet been decided by the Supreme Council.

Sir J. BUTCHER: Is the right hon. Gentleman aware that this Report on the Leipzig trials has already been unofficially published, in part, at any rate, in Paris? Is there any reason why it should not be published in full after this lapse of time?

Mr. CHAMBERLAIN: I am not aware of that, but will make inquiry.

Sir J. BUTCHER: Can the right hon. Gentleman give us any assurance, in view of the long period that has elapsed since the Treaty of Versailles was passed, that the German War prisoners will be brought to trial?

Mr. CHAMBERLAIN: I can add nothing to the statements I have already made.

Oral Answers to Questions — GERMAN REPARATION.

Lieut.-Commander KENWORTHY: 30.
asked the Prime Minister whether he will consider giving a day to the discussion of the Motion on the Order Paper in the name of the hon. Member for the Central Division of Kingston-upon-Hull on the subject of German reparation payments, especially in view of the fact that no discussion of this matter has been
permitted at Genoa—[That, in the opinion of this House, the Reparation Clauses of the Treaty of Versailles have proved to be unworkable in practice and injurious to the trade and commerce of this country; and that these clauses should be revised forthwith]?

Mr. CHAMBERLAIN: No, Sir. I am afraid I see no prospect of granting a day for this discussion.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that if the Genoa Conference goes on and we are blocked from discussing this question, very disastrous events may occur in Europe without this House having an opportunity of expressing its opinion?

Mr. CHAMBERLAIN: I am not anticipating any such disaster.

Captain BENN: 35.
asked the Lord Privy Seal on what date the provisional terms offered by the Reparation Commission to the German Government lapse if not accepted; whether in such an event the London agreement becomes operative; and whether under that agreement the British Government is committed to any joint military measure with France for enforcing the London payments?

Mr. CHAMBERLAIN: The answer to the first part of the question is "the 31st May"; to the second "yes." and to the third "no."

Captain BENN: Are we to understand that the sub-paragraph (b) of the London Ultimatum, which threatens the occupation of the Ruhr by British troops, has now lapsed?

Mr. CHAMBERLAIN: No, Sir. The hon. and gallant Member will, I hope, understand from my answer exactly what I have said. He asked whether under the agreement the British Government is committed to any joint military measure in France for enforcing the London payments?

Captain BENN: Is the right hon. Gentleman aware that we informed the German Government that, failing compliance, we should occupy the Ruhr? Has that threat lapsed or not?

Mr. CHAMBERLAIN: I prefer to confine myself to the answer I have given. The hon. and gallant Member can easily
put questions which are very embarrassing to the Government and which it is not easy to answer without injury to the public interest.

Oral Answers to Questions — BULGARIA.

Mr. A. HERBERT: 76.
asked the Under-Secretary of State for Foreign Affairs under what Treaty Bulgaria was promised an exit to the Ægean Sea?

Mr. PARKER: I have been asked to answer- An undertaking was given in Article 48 of the Treaty of Neuilly to the effect that the Powers would ensure to Bulgaria economic outlet to the Ægean Sea. Effect was given to this undertaking by the subsequent Treaty signed between Greece and the principal Allied Powers on 10th August, 1920. This latter Treaty, which is generally called the "Thracian Treaty," is still unratified.

Oral Answers to Questions — UPPER SILESIA (ALLIED TROOPS).

Lieut.-Commander KENWORTHY: 71.
asked the Under-Secretary of State for Foreign Affairs the total cost to date, approximately, of the Allied troops and commissions in Upper Silesia; what is the approximate monthly cost of these troops and commissions; who is bearing

The following statement shows the Total Value of Articles wholly or mainly manufactured imported into the United Kingdom from (a) abroad, registered during the months of January, February and March of the years 1914, 1920, 1921 and 1922, distinguishing the proportion of such Articles imported from Germany.

IMPORTED OF ARTICLES WHOLLY OR MAINLY MANUFACTURED.


Month.
1914.
1920.
1921.
1922.


Imported from all countries:—
Thsnd.£
Thsnd.£
Thsnd.£
Thsnd.£


January
…
15,685
31,529
30,467
17,710


February
…
16,300
33,042
23,394
16,576


March
…
18,011
38,156
24,931
20,309


Total
…
49,996
102,727
78,792
54,595


Total imported from Germany (b)
…
14,471 (c)
2,854
7,194
5,092

(a) Imports from abroad of Articles Wholly or Mainly Manufactured cannot be divided, for the periods specified, into the classes "Of Foreign Origin," and "Of Empire Origin," respectively.

(b) Particulars for individual months are not available in the case of imports from Germany.

(c) Approximate.

Oral Answers to Questions — DYESTUFFS.

Mr. DOYLE: 17.
asked the President of the Board of Trade whether he can give a Return of the quantities of dyestuffs admitted by the Licensing Committee appointed under the Dyestuffs Act of the

the cost of these troops; and when is it expected that they will be withdrawn?

Mr. PARKER: Without consulting the French and Italian Governments my hon. Friend is not in a position to answer the first two parts of the question. As to the last two parts, he can add nothing to the reply which he gave to the lion. Member for East Fife on 20th March.

Oral Answers to Questions — TRADE AND COMMERCE.

IMPORTS (FOREIGN MANUFACTURED GOODS).

Mr. HOGGE: 11.
asked the President of the Board of Trade if he can give the total value of imports of foreign manufactured goods for the months of January, February and March of 1914, 1920, 1921 and 1922; and what proportion of the imports came from Germany?

Mr. BALDWIN: The answer can be given most conveniently in the form of a table, which, with the permission of the House, I will have printed in the OFFICIAL EEPORT.

Following is the table:

quantities which have been refused admission, and of the particular exporting countries in each case?

Mr. BALDWIN: I will have a statement printed in the OFFICIAL BEPORT.

The following is the statement:

Particulars of applications for licences which were granted or refused during the year 1921, and the months of January and February, 1922.

Granted.
Refused.


From—

lbs.
lbs.


Switzerland
…
2,138,171
610,755


Germany
…
796,215
991,894


Other sources
…
216,455
268,568


Total
…
3,150,841
1,871,217

Mr. WADDINGTON: 24.
asked the President of the Board of Trade whether any increases have recently been made in the price of German dyes for qualities not produced in this country; whether for German dyes of qualities which can be efficiently produced in this country the prices are being reduced; and whether he has any information that certain leading textile dye users in this country recently visited Germany and recommended German dye makers to artificially reduce the price in this country of German dyes which compete with similar British dyes?

Mr. BALDWIN: I understand that the German dyestuff manufacturers have recently raised their prices generally, but that when dyestuffs equivalent to their products are put on the market by British manufacturers it is their practice to reduce their prices in an attempt to undercut the British producers. As regards the last part of the question I have no doubt that some British consumers have sought to obtain specially low quotations from Germany.

Major ENTWISTLE: Is it not the fact that where licences are granted for dyes they are given to Swiss dyes, which are of higher price than those of other countries?

Mr. BALDWIN: I should like to have notice of that question.

Oral Answers to Questions — BRITISH AMERICA NICKEL CORPORATION.

Lieut.-Colonel NALL: 18.
asked the President of the Board of Trade whether His Majesty's Government still holds $3,000,000 6 per cent, first mortgage 15-year gold bonds in the British America Nickel Corporation; whether the corpora-
tion has paid all interest and principal due in respect of such bonds; whether the Government is now represented on the board of the corporation; and, if so, what is the name of such representative?

Mr. BALDWIN: Under the scheme of re-organisation of the corporation which became effective early in 1921, His Majesty's Government have exchanged the $3,000,000 first mortgage bonds for a similar amount of A. income bonds. No interest or repayment in respect of the capital of these bonds has been paid by the corporation. The Government representatives on the Board of the British America Nickel Corporation are Sir Robert Borden and Sir Eric Hambro.

Mr. KILEY: Is it not a fact that the Board of Trade are still receiving large quantities of nickel from this company?

Mr. BALDWIN: I should like to have notice of that question.

Oral Answers to Questions — CONDENSED MILK.

Mr. DOYLE: 20.
asked the President of the Board of Trade whether he is aware that in many countries almost entirely dependent on imports for their milk supplies the importation of machine-skimmed milk is forbidden, and that in several important British Colonies, including the South African Union, a prohibitive tariff on skimmed condensed milk exists; and whether, in the advantage of British trade, similar restrictions can be applied in this country to the importation of machine-skimmed milk, particularly as we are not dependent upon imports for our milk supplies, and that the continuation of the imports of low-grade condensed milk is seriously affecting the condensed milk industry in England, which had developed so considerably during the War?

Mr. BALDWIN: The answer to the first part of the question is in the affirmative, and, to the second part, that I am not prepared to introduce legislation for the purpose indicated.

Captain TERRELL: 80.
asked the Minister of Agriculture whether he has considered the desirability of promoting legislation to fix a standard of content for dried and tinned milk in order that the interests of the consumer may be protected; and, in that case, what decision I has he arrived at?

The MINISTER of HEALTH (Sir Alfred Mond): I have been asked to reply to this question. My predecessor appointed a Committee to consider the question of fixing standards for condensed milk, and draft Regulations were prepared to give effect to the recommendations of the Committee. It appeared, however, that there was no general agreement as to the standards to be fixed, and I therefore decided not to proceed with the Regulations. I am not aware of any sufficient reason for fixing a standard for dried milk, as there cannot be any misapprehension as to the degree of condensation of this product, and any adulteration can be dealt with under the Sale of Food and Drugs Act.

Mr. DOYLE: 83.
asked the Minister of Agriculture what quantities of machine-skimmed condensed milk were imported into this country during January, February, and March, 1922, and how that quantity compares with the corresponding months of 1921 and 1920; and whether he is aware that the continued importation of manufactures of low-grade condensed milk is inflicting much hardship upon the condensed milk industry of England, where little or no low-grade quality condensed milk is produced?

The MINISTER of AGRICULTURE (Sir Arthur Boscawen): The quantity of condensed (sweetened) separated or skimmed milk imported into the United Kingdom in the first three months of 1922 was 278,230 cwts., as compared with 157,112 cwts. in 1921 and 82,901 cwts. in 1920. The proportion of this which was machine-skimmed cannot be stated. I am aware that complaints have been made of the extent to which this grade of milk competes with the condensed milk industry in this country.

Oral Answers to Questions — UNIVERSITIES AND COLLEGES.

Mr. WILLIAM GRAHAM: 26.
asked the Prime Minister whether his attention has been drawn to the fact that the only opportunity of discussing the grants to British universities, the position of women students and teachers at Cambridge University as settled by the recent decision, and the important recommendations of the Royal Commission on the Universities of Oxford and Cambridge will be upon the Treasury Vote and not
on the Vote for the Board of Education; and whether, seeing that this is not a satisfactory method, in view of the far-reaching character of the issues raised, he will be prepared to grant a separate day for the Parliamentary discussion of these problems?

Mr. CHAMBERLAIN: The Universities and Colleges Vote covers England and Scotland, and the expenditure is accounted for by the Treasury and not by the Board of Education. Arrangements can be made for a discussion of this Vote on one of the days allotted to Supply if a request is made in the usual manner.

Mr. MALONE: Will the Government be prepared to support a Bill to place women at Cambridge on the same equality?

Mr. CHAMBERLAIN: That does not arise out of the question on the Paper.

Oral Answers to Questions — RUSSO-GERMAN AGREEMENT.

Mr. MALONE: 27.
asked the Prime Minister whether he is aware that full particulars of the Russo-German agreement were published in the "Izvestia" in Moscow on 5th April; whether Mr. Hodgson, British Agent in Moscow, brought this to the notice of His Majesty's Government; and whether, before the Genoa Conference, he was informed by the Foreign Office or any other sources about this agreement?

Mr. CHAMBERLAIN: The article in the "Izvestia" to which presumably the hon. Member refers makes no reference to any clauses of so far-reaching an importance as those contained in the Treaty of Rapallo, and consists of a message sent by a Soviet press agency in Hanover to which Mr. Hodgson had, I consider, no grounds for attributing any special importance. The answer to the last part of the question is in the negative.

Lieut.-Colonel Sir F. HALL: 42.
asked the Lord Privy Seal whether, before and subsequent to the opening of the Genoa Conference, despatches were received from the British Ambassador at Berlin dealing with the negotiations between the German and Russian Governments which led up to the Treaty recently concluded between those two countries; and,
if so, will he state whether such despatches will be laid upon the Table or can be issued in the form of a White Paper or otherwise for the information of Members?

Mr. CHAMBERLAIN: Negotiations have been proceeding intermittently between the German and Russian Governments since the beginning of the year, and reports to that effect were received from His Majesty's Ambassador at Berlin, but it was not known that any agreement resembling that which was recently concluded was impending. It is not intended to lay any despatches from His Majesty's Ambassador at Berlin on the subject of the Genoa Conference at present.

Sir W. JOYNSON-HICKS: Was the Prime Minister in full possession of these facts before he made his statement in this House before he went to Genoa?

Mr. CHAMBERLAIN: There is no information in the possession of His Majesty's Government to modify in any way the statement made by the Prime Minister at Genoa. The information received was so small in importance that it was not circulated.

Sir W. JOYNSON-HICKS: Did not the Foreign Office think it their duty to tell the Prime Minister that negotiations were and had been taking place between these two Governments before he went to Genoa, where he was going to meet their representatives?

Mr. CHAMBERLAIN: I cannot say without notice exactly what information might have been conveyed to the Prime Minister, but there was no information in the possession of His Majesty's Government—and this is the statement which is of importance, and it is of great importance, because, apparently, the suggestion is that the Prime Minister made a statement not borne out by the facts—there is no information in the possession of His Majesty's Government to conflict in any way with the declaration which the Prime Minister made at Genoa the other day. His Majesty's Government were taken completely by surprise by the character of this agreement, and had no previous notice of it.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that the
whole Russo-German Agreement was arranged within four days at Genoa, and that the Prime Minister in this House could not possibly be aware of it? [HON. MEMBERS: "HOW do you know?"] Because I was there.

Mr. CHAMBERLAIN: I am not aware of that, and I should be surprised if it were true that the whole Agreement was arranged within four days.

Oral Answers to Questions — RUSSIA.

BRITISH INTERESTS (NAVAL PROTECTION).

Major Sir BERTRAM FALLE: 34.
asked the Lord Privy Seal if the Russian Government claim the right to forbid fishing within 12 miles of the Russian coast; and if some of His Majesty's ships have been sent to protect British interests along the Murmansk and other coasts, and if the ships so sent are sufficiently strong to deal with any recalcitrant Russian vessel or vessels?

Mr. CHAMBERLAIN: I would refer my hon. and gallant Friend to the answer given by the Under-Secretary of State for Foreign Affairs to the hon. and gallant Member for Central Hull on the 22nd March. As regards the second part of the question, H.M.S. "Harebell" is at present on service in Murmansk waters, and is considered capable of carrying out the duties for which she was sent—namely, the protection of British fishing vessels and interests.

Sir B. FALLE: Has not this ship been sent to these waters to maintain international law? Is she strong enough to resist attempts on the part of the Soviet?

Mr. CHAMBERLAIN: I am advised that she is capable of carrying out the duties for which she has been sent.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that she is quite a slow sloop, steaming only 15 knots? Cannot a faster and stronger vessel be sent?

Lieut.-Colonel ARCHER-SHEE: Have not the Russian Soviet Government two torpedo boat destroyers in these waters, both stronger than the British ship?

Mr. CHAMBERLAIN: I cannot say. That is a question which should be addressed to the Admiralty.

Oral Answers to Questions — BOLSHEVIST PROPAGANDA.

Mr. GIDEON MURRAY: 39.
asked the Lord Privy Seal whether his attention has been drawn to a statement in the Press that a sum of£500,000 has just been assigned by the executive of the Third International, at Moscow, for the purpose of intensifying Communist propaganda in Great Britain and France; what steps the Government propose to take to prevent foreign moneys being introduced into this country for the purpose of promoting revolutionary propaganda directed towards the subversion of the constitution; and whether this serious announcement will be taken into account by the Prime Minister at Genoa?

Mr. ORMSBY-GORE: 32.
asked the Prime Minister whether his attention has been called to the resolution of the executive of the Third International at Moscow to allot a sum of 5,000,000 gold roubles for the purchase of foreign exchange in order to intensify Bolshevist propaganda in Great Britain and France; whether this action by the Third International conflicts with the Russian trade agreement; and what steps he proposes to take to prevent the spending by famine-stricken Russia of so large a sum in this country on subversive propaganda?

Mr. CHAMBERLAIN: I have seen a statement to this effect in the Press, but we have no official confirmation of it from our representative at Moscow. I shall communicate the report to the Prime Minister. If proof is obtained at any time that any money is being supplied or used here for illegal purposes action will at once be taken by the proper authorities.

Lieut.-Colonel CROFT: Is the right hon. Gentleman aware that the late Secretary of State for India informed this House that a large part of the trouble in India was due to propaganda of this description?

Mr. CHAMBERLAIN: I am not aware that my right hon. Friend made that statement. If my hon. and gallant Friend wishes to put a question on the subject I shall be glad if he will give me notice and also supply me with the reference.

Lieut.-Colonel CROFT: I will send a copy of the right hon. Gentleman's speech.

Mr. MURRAY: Is there any legislation at the present moment under which cases like this can be proceeded against?

Mr. CHAMBERLAIN: There is great difficulty in answering questions so vaguely phrased as "cases like that." There is legislation for dealing with illegal operations. If the operations are not illegal there is no legislation for dealing with them.

Oral Answers to Questions — GENOA CONFERENCE.

Mr. G. MURRAY: 37.
asked the Lord Privy Seal whether, in view of the illness of the Secretary of State for Foreign Affairs and his consequent inability to attend the Genoa Conference, any steps have been taken to till his place at that Conference by someone versed in foreign affairs; and whether the Foreign Office is officially represented there; and, if so, by whom?

Sir WILLIAM DAVISON: 38.
asked the Lord Privy Seal who is the representative of the Foreign Office at the International Conference at Genoa?

Mr. CHAMBERLAIN: While I regret that, for the reason mentioned, the Secretary of State for Foreign Affairs has so far not been able to attend the Conference, I cannot, accept the implication contained in the first part of Question No. 37, if only because the British Delegation includes the Prime Minister. The British Delegation also includes the Legal Adviser of the Foreign Office and three other expert members of that Department.

Sir W. DAVISON: Does not the right hon. Gentleman see that if foreign affairs wore left to the Foreign Office we should not have got into the tangle which we are now in?

Sir BURTON CHADWICK: Is the Lord Chancellor a member of the British Delegation?

Captain LOSEBY: Is the right hon. Gentleman aware that, in spite of certain distorted reports in the Press, the general feeling of the country is one of intense pride and gratification at—[Interruption.]

Lieut.-Colonel ARCHER-SHEE: 41.
asked the Lord Privy Seal whether, in view of the fact that the questions of boundaries and reparations were expressly excluded from the discussions at the Genoa Conference, a day can be given
for a Debate upon the further proposal at Genoa to call a meeting of the signatories to the Versailles Treaty for the purpose of discussing these vital issues at Genoa?

Mr. CHAMBERLAIN: I do not think that my hon. and gallant Friend has quite correctly interpreted the purpose of the proposed meeting of the signatories of the Treaty of Versailles; but in any case I cannot allocate a day for such a discussion at present.

Lieut.-Colonel ARCHER-SHEE: Will the right hon. Gentleman convey to the Prime Minister that the majority of the opinion in this House and in the country is still in favour of a strong pact with France and insisting upon Germany carrying out her obligations?

Oral Answers to Questions — TRADE BOARDS.

Lieut.-Colonel JAMES: 40.
asked the Lord Privy Seal whether it is the intention of the Government to introduce legislation during the present Session to give effect to the recommendations of Lord Cave's Committee on Trade Boards?

Sir M. BARLOW: I have been asked to reply. The matter has not yet been considered by His Majesty's Government. I should be glad if my hon. and gallant Friend would put his question down again a little later.

Lieut.-Colonel JAMES: I will put the question down again next; week.

Oral Answers to Questions — CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).

Sir F. HALL: 43.
asked the Lord Privy Seal whether his attention has been called to a letter, B/H548, recently published in the Press, which was sent on the 3rd July, 1919, by the Central Control Board for Liquor Traffic, Carlisle district, to a Carlisle club, at the time the Government removed the restrictions on the quantity of beer to be brewed, threatening certain coercive action in the event of the club placing its orders for beer elsewhere; if he will state by whose orders this communication was sent; whether its contents were at any time brought before the Central Liquor Control Board; and, if so, what action was taken thereon?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): I have been asked to answer this question. I understand that the letter was written by the Central Control Board's late general manager for the Carlisle district in the exercise of his discretion. He reported the letter and other circumstances of the case to the Board, who, I understand, did not consider that the case called for any further special action on their part.

Sir F. HALL: Does not the right hon. Gentleman think it discreditable that a representative of the Government should take up such an attitude as is indicated in the letter referred to in this question?

Mr. SHORTT: No, Sir; and if my hon. and gallant Friend knew the whole of the circumstances, I do not think he would think so.

Sir F. HALL: Are the circumstances as laid down in the letter referred to in the question; and, if so, does the right hon. Gentleman agree with action of that character? Is any action going to be taken in connection with the officer who indited or sent this letter, or is responsible for it?

Mr. SHORTT: The letter was written in 1919, and he has ceased for a long time to be in office.

Colonel Sir A. HOLBROOK: Is it the fact that in this letter the statement was made that he had sent to this club 1,000 per cent, more spirits than he was entitled to under the Restriction Act?

Mr. SHORTT: Yes, Sir; I have read the letter.

Oral Answers to Questions — COAL (PRODUCTION AND EXPORTS).

Mr. GILBERT: 45.
asked the Secretary for Mines what was the total coal production for the first three months of this year; how the figures compare with the same months of 1921; can he state what were the total coal exports from this country for the same period; and how they compare with the exports for the like period in 1921?

The SECRETARY for MINES (Mr. Bridgeman): During the first three
months of this year the total output of saleable coal in the United Kingdom was 61,000,000 tons, or about 7,000,000 tons more than in the corresponding months of 1921. The total quantity exported was 13,250,000 tons, or 7,750,000 tons more than in the corresponding period of 1921.

Oral Answers to Questions — EX-SERVICE MEN (UNIVERSITY EDUCATION).

Sir J. BUTCHER: 46.
asked the President of the Board of Education whether he can state how many of the 26,470 ex-service men who were sent to the universities for study at the expense of the State have been successful in obtaining employment; and what courses of study have proved most efficacious in enabling these students to obtain employment?

The PRESIDENT of the BOARD of EDUCATION (Mr. Herbert Fisher): I am not at present in a position to answer the first part of the question. Steps have, however, been taken to obtain information as regards students who have completed their courses. As regards the latter part of the question, the careers towards which these students' courses have been directed are so diverse in character, and employment in different trades and professions is so potently affected by the temporary fluctuations of industry and commerce, that no reliable comparison can at this stage be instituted between one course of study and another as to their relative efficacy in enabling students to obtain settled employment.

Captain TERRELL: When will the right hon. Gentleman be in a position to answer the first part of the question?

Mr. FISHER: I hope soon to be in a position to do so. I have already received information with respect to some 700 students, and the results have been very satisfactory.

Sir J. D. REES: Is it certain that any of these courses of study have proved efficacious in enabling these students to obtain employment?

Mr. FISHER: Yes, Sir, absolutely.

Sir J. BUTCHER: Could the right hon. Gentleman say approximately how many
of these men have been successful in obtaining employment—whether they are many more than 700 or not?

Mr. FISHER: Yes, Sir. I have merely received replies from 12 colleges or institutions, and those replies only affect 700 students. The replies in respect of those 700 are entirely satisfactory.

Sir J. D. REES: 47.
asked the President of the Board of Education whether the names of ex-officers who have been, and are, receiving university education at the expense of the taxpayers, are anywhere, and, if so, where, available in order that the taxpayers may be enabled to judge whether they are persons to whom this form of public assistance should properly be given; and will he give the names of the Board of Selection which exercises this patronage on behalf of the taxpayer?

Mr. FISHER: The names of students to whom awards have been made under the scheme for the higher education of ex-service students are not published, nor do I think that it is desirable that they should be published. About 40 per cent, of these students had been commissioned officers and about 60 per cent, had served in the ranks. Great care has been taken that awards should only be made to men who would derive adequate benefit from them, and whose circumstances are such as to warrant assistance from the State. Every applicant was required to make a statutory declaration as to his financial position. All awards have been made upon the recommendation of the head of the college or institution which the student desired to enter, and a further recommendation from a specially appointed local committee at each university centre, composed of university representatives. All proposed awards have been submitted to me personally before being made.

Sir J. D. REES: How is the taxpayer to inform himself as to the distribution of this patronage, if my right hon. Friend denies the information as to the names of those selected?

Captain GEE: Will the right hon. Gentleman see that the names of all persons who are in receipt of pensions from the Indian Civil Service will be published so that the taxpayers can see whether they are entitled to them?

Mr. FISHER: I shall be glad confidentially to tell the hon. Baronet the names, in order that he may satisfy himself personally that due care has been taken. I have personally gone through the qualifications of every one of these students, and have satisfied myself that they are fit recipients of this grant; but I shall be very glad to show the hon. Baronet the names.

Dr. MURRAY: Would the hon. Baronet have any money to pay his taxes if these men had not fought for him?

Oral Answers to Questions — EDUCATION.

TEACHERS (SUPERANNUATION).

Sir SAMUEL ROBERTS: 49.
asked the President of the Board of Education whether a teacher who is already qualified for a pension under the School Teachers (Superannuation) Act, 1918, in that he is 60 years of age and has already completed 30 years of pensionable service, will still be eligible for all the benefits under that Act, even though he continues teaching and does not make application for a pension until after the introduction into Parliament, and passage by it, of any new Act which may have the effect of modifying the character of the benefits for which teachers are now eligible?

Mr. FISHER: I am afraid that I cannot anticipate the terms of any legislation which Parliament may pass on this subject.

Oral Answers to Questions — SECONDARY EDUCATION, BEDLIXCTOXSHIRE.

Sir FRANCIS BLAKE: 50.
asked the President of the Board of Education whether he is aware of the urgent need for the provision of facilities for secondary education in the industrial district of Bedlingtonshire, Northumberland, and of the unanimous resolution passed by the county council in favour of the establishment of the school; whether the Board of Education has refused to sanction the purchase of the site; and whether, having regard to the fact that it can now be purchased on advantageous terms, he will reconsider that decision even if it is necessary, under existing financial circumstances, to defer approval of the erection of the buildings?

Mr. FISHER: In view of the somewhat altered circumstances, I am prepared to
sanction the acquisition of the site, provided that the Board are satisfied as to the purchase money, it being part of the understanding that building is postponed.

Oral Answers to Questions — EXPENDITURE, 1922–23.

Sir J. D. REES: 51.
asked the President of the Board of Education whether his attention has been called to the difference between his estimate of£75,450,000 for cost to rates and taxes of education for 1922–23 and the estimate of the Geddes Report of£103,000,000 for the same year, the addition to his figures of£13,000,000 for Scotland, leaving a difference of£15,000,000 for which no explanation has so far been offered; and whether he has any statement to make?

Mr. FISHER: The estimate of£75,450,000 is the assumed total of the net expenditure of local education authorities in England and Wales, which will be met partly from rates and partly from taxes. The composition of this total and the assumptions on which it is based are explained on page 8 of the Memorandum on the Board of Education Estimates, 1922–23. The estimate of£103,000,000 is apparently an estimate, based on provisional forecasts, of the total educational expenditure from taxes and rates, whether included in the accounts of local education authorities or not.

Sir J. D. REES: Could the right hon. Gentleman say, for the information of the public, what is to be the total expenditure up to the 31st March, 1923? That was what the House expected on the Education Estimate, and did not, I think, get.

Mr. FISHER: I think I could give the hon. Baronet the amount now, but I hesitate to commit myself to the precise figure without notice.

Oral Answers to Questions — SCHOOL FURNITURE.

Mr. AMMON: 52.
asked the President of the Board of Education whether, having regard to the need to accelerate the repair of school furniture and as a means to provide employment in the furnishing trades, be will agree that such work should rank for grant?

Mr. FISHER: In view of the limits placed upon the amount of expenditure in the current financial year which can be recognised by the Board for grant, I regret that I cannot at present give any
undertaking as to the recognition of abnormal and accelerated expenditure such as the hon. Member suggests.

Oral Answers to Questions — LOCAL AUTHORITIES' ACCOUNTS.

Lieut.-Colonel CROFT: 53.
asked the President of the Board of Education whether lie is aware that the new form on which the local education authorities require to submit their education accounts was not issued until the 16th December, 1921, and was not received until the 23rd December; whether he is aware of the great difficulty in preparing the form; and will he consider the postponement of tins form for the present year?

Mr. FISHER: I am sending the hon. and gallant Member a copy of the answer which I am giving to-day to the hon. and gallant Member for the Moss Side Division of Manchester (Lieut.-Colonel Hurst).

Oral Answers to Questions — PASSPORTS (TURKEY).

Sir CHARLES TOWNSHEND: 62.
asked the. Under-Secretary of State for Foreign Affairs why the Foreign Office is refusing passports to Turkey to Members of Parliament when other people not in Parliament and not in Government service are being permitted freely to visit that country.

Mr. PARKER (for Mr. Cecil Harms-worth): A passport to proceed to Turkey has been refused to no Member of Parliament except the hon. and gallant Member himself. The reason of this refusal, as has been more than once explained to him, was that, in the view of His Majesty's Government, his appearance in Turkey would be misinterpreted by our Allies, as well as by the Greeks and the Turks, and would consequently be prejudicial to the present negotiations for peace.

Mr. HERBERT: Is there any precedent for refusing the hon. and distinguished Member of this House a passport to a foreign country simply because he happens to disapprove of the policy of the Government?

Mr. PARKER: I am afraid I am not in a position to answer. The representative of the Foreign Office is ill.

Sir C. TOWNSHEND: I beg to give notice that I will put a question to the Leader of the House on Wednesday.

Lieut.-Commander KENWORTHY: On a point of Order. Is it not a reflection on this House for a passport visa to be refused to one of its most distinguished Members?

Lieut.-Colonel CROFT: On that same point of Order. Has your attention been called to the fact that another hon. and gallant Gentleman had a passport to Genoa and to Germany during the recent Recess and yet it is denied to my hon. and gallant Friend?

Mr. SPEAKER: It is not part of my duty to examine the credentials of Members applying for passports.

Oral Answers to Questions — ASIA MINOR.

Sir C. TOWNSHEND: 63.
asked the Under-Secretary of State for Foreign Affairs if his attention has been directed to statements in the Press in the past few days to the effect that a section of the Greek army in Asia Minor have declared that they will not retire from Turkish territory, but will establish an independent Greek territory therein; and whether he will state what steps His Majesty's Government propose to take in view of this grave state of affairs?

Sir J. D. REES: 64.
asked the Under-Secretary of State for Foreign Affairs whether he will give the House any information regarding a reported revolt in the Greek Army against the evacuation of Smyrna and Ionia, and an intention on the part of a portion of such army to defy the Powers and remain in Smyrna?

Mr. PARKER: Various reports have been received during the last two months regarding this movement, which, however, has been disavowed by the Greek Government, and the importance of which seems to have been somewhat exaggerated. Its object appears to have been to prevent the Greek population of Ionia from being handed back to the Turks without adequate guarantees for their safety. Such guarantees, however, will in fact be provided if the Allied proposals are accepted. On 31st March, His Majesty's Minister at Athens and the British representative at Smyrna were instructed to make it clear to the Greek Government and to the
Greek authorities in Asia Minor that His Majesty's Government disapproved most strongly of the movement, which, if allowed to develop, could only produce disastrous results. Severe warnings have also been conveyed unofficially to the leaders of the Greek community in Constantinople. Should the movement appear likely to continue or develop after the Allied proposals have been accepted by both the Greeks and the Turks His Majesty's Government will consider what measures may be required to deal with it.

Captain COOTE: 67.
asked the Under-Secretary of State for Foreign Affairs whether he has now consulted the various Governments concerned regarding the advisability of sending out special British and French representatives to the Smyrna district during the period of negotiations prior to the conclusion of an armistice or peace between Greece and Turkey; and, if so, what replies he has received?

Mr. PARKER: There are already British officers attached to the Greek forces and there are Allied consular officers at Smyrna. Until the Allied proposals are accepted by the two belligerents, it is not desirable to send Allied officers into the Kemalist area nor opportune to initiate the safeguards devised by the Allied Military Committee under Marshal Foch.

Captain COOTE: 68.
asked the Under-Secretary of State for Foreign Affairs whether he has received any Reports of further fatal disturbances in Asia Minor; whether he has any information as to the attitude of the belligerent forces and to the formation of unauthorised and uncontrolled armed bands; and what means of arriving at a true appreciation of the situation and of events in that area he possesses?

Mr. PARKER: The answer to the first part of the question is in the negative. Reports about the attitude of the belligerents are varied, but it appears that each side is ready to go on fighting. It has been reported that the Greek civil population round Smyrna has been armed, but this has not been confirmed by investigation. Nevertheless, brigandage is indigenous, and it may be remembered that the whole Kemalist force has developed out of irregular bands. With reference to the last part of the question,
information is received from His Majesty's High Commissioner and the British military authorities at Constantinople, from the British liaison officers with the Greek army, from His Majesty's Consular officers in Smyrna and Syria, and from the British authorities on the borders of Iraq.

Mr. A. HERBERT: 69.
asked the Under-Secretary of State for Foreign Affairs whether his attention has been called to the recent burning of Turkish villages by Greek regular and irregular soldiery?

Mr. PARKER: The attention of His Majesty's Government has repeatedly been called within the last few weeks to the deplorable incident that happened at Karatepe in February last, and an explanation has been given of the circumstances in which it occurred. Save this, no definite accusations against the Greeks of a similar nature have been brought to my notice.

Mr. HERBERT: Will that information be passed on to the House?

Mr. PARKER: I will convey that question to my right hon. Friend.

Oral Answers to Questions — TRANSPORT.

ROADS AND BRIDGES (MAINTENANCE).

Captain R. TERRELL: 56.
asked the Parliamentary Secretary to the Ministry of Transport if he will state the aggregate amount of expenditure on roads and bridges obtained from local rates and from the direct taxation of motor vehicles during the past year; whether the proportion is officially regarded as fair; and whether he is aware of the strength of agricultural feeling on the disparity of the contribution and the weight of the local burden?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Mr. Neal): Accurate particulars are not yet available as to the amount spent out of rates upon roads and bridges during the past financial year. The best estimate I can form is that a total sum of approximately£50,000,000 was spent by highway authorities, towards which payments have been made or promised from the Road Fund amounting to about£10,000,000. I am aware of the views held on the subject of this expenditure by certain representa-
tives of agricultural interests, but I do not think that they appreciate to the full extent the benefit accruing to local authorities by the introduction of the new motor licence duties.

Captain TERRELL: Will the right hon. Gentleman answer the last part of the question, whether the proportion is officially regarded as fair?

Mr. NEAL: A very much larger proportion is paid than was ever paid before.

Mr. PRETYMAN: Do not the Government think it is time there should be a complete inquiry into the method of how roads are constructed and the expense of roads? It is a matter of the very first importance and of extreme difficulty.

Mr. NEAL: An inquiry is proceeding regularly as to the construction of roads, and recently committees have been set up in each area of county and county borough surveyors in order to get the best and latest information and to secure economy and stability.

Mr. PRETYMAN: Has that inquiry going on any bearing upon the financial side of the question as between motor traffic and the local authorities?

Mr. NEAL: It is very difficult to separate that from the larger question of local and national finance. The taxation is a special form upon a special class of taxpayers.

Mr. PRETYMAN: Does not that answer show the necessity for an inquiry.

Mr. SPEAKER: This is becoming a Debate.

Oral Answers to Questions — OMNIBUS AND UNDERGROUND ROUTES (OVERCROWDING).

Mr. MALONE: 57.
asked the Parliamentary Secretary to the Ministry of Transport whether he is aware of the discomfort and difficulty of travelling on omnibus and underground routes at certain hours of the day; whether, before His Majesty's Government sanctioned the guarantee of£5,000,000 to this combine under the Trade Facilities Act, 1921, any stipulations were made to ensure that the public, whose work obliges them to travel at fixed hours in the morning and evening, should be provided with adequate facilities?

Mr. YOUNG: The guarantee in question was given by the Treasury on the advice of the Advisory Committee in accordance with the terms of the Trade Facilities Act. All relevant considerations were doubtless taken into account by the Committee. The hon. Member may, however, consider that one of the results of the guarantee to be given under the Trade Facilities Act will, I hope, be to increase very materially the accommodation for travellers on one of the most congested of the routes in London, namely, the City and South London Railway.

Oral Answers to Questions — CHEAP TICKETS.

Mr. GILBERT: 60.
asked the Parliamentary Secretary to the Ministry of Transport whether he has any reply from the railway companies as to whether they intend to grant during the ensuing holiday season any of the pre-War facilities, such as tourist tickets, cheaper day-return tickets, and Friday-till-Tuesday cheap week-end tickets; and, if not, will he urge on the companies that these facilities should be restored to the travelling public in order that seaside and holiday resorts may benefit by trade which such cheap tickets tend to bring to them?

Mr. NEAL: The railway companies have under consideration the question of tourist ticket facilities and fares, and it is anticipated that an announcement will be made shortly; as regards cheaper day-return tickets and week-end tickets, the companies inform me that they do not see) their way at present to make any further concession.

Oral Answers to Questions — RAILWAY FARES.

Mr. GILBERT: 61.
asked the Parliamentary Secretary to the Ministry of Transport whether his Department can bring any pressure upon the railway companies in order to compel them to grant cheaper railway fares to the travelling public; and whether he will urge on the railway companies, in view of the reduction of wages and other costs of working, the necessity of at once reducing the percentage of 75 per cent, now charged extra on the pre-War cost of ordinary fares?

Mr. NEAL: I would refer the hon. Member to my reply to him on 13th March, to which I regret I can add nothing.

Oral Answers to Questions — FAR EASTERN REPUBLIC (JAPANESE TROOPS).

Mr. AMMON: 77.
asked the Under-Secretary of State for Foreign Affairs whether his attention has been called to a report in the Press of a Japanese offensive against the Far Eastern Republic, 150 miles north of Vladivostok; and whether, seeing that such action is not in conformity with the promise made by the Japanese at the Washington Conference to withdraw their troops, what protest His Majesty's Government intends making against such action?

Mr. PARKER: My hon. Friend has seen reports in the Press that as the results of the invasion of the Japanese zone, a collision has occurred between the troops of the Far Eastern Republic and the Japanese garrison in Eastern Siberia. His Majesty's Government do not propose to take any action in the matter.

Oral Answers to Questions — ABYSSINIA (SLAVE TRADE).

Mr. ORMSBY-GORE: 78.
asked the Under-Secretary of State for Foreign Affairs whether his attention has been called to the reports of a recrudescence of slavery and the slave trade in Abyssinia; whether any report on this matter has been received or called for from the British Minister at Addis Abeba; and whether ho will communicate with the other two European Powers signatory to the tripartite agreement of 1906 with a view to their making joint representations and taking joint action in Abyssinia to fulfil the Treaty of St. Germain of 1919 binding the signatory Powers to endeavour to secure the suppression of slavery and the slave trade in Africa?

Mr. PARKER: The attention of the Secretary of State has been drawn to these reports, and communications are proceeding with His Majesty's Minister at Addis Abeba on the subject. Further information from the Minister is awaited before a decision is taken upon the course of action which can most usefully be taken.

Oral Answers to Questions — AGRICULTURAL CONCILIATION COMMITTEE AGREEMENTS.

Captain TERRELL: 79.
asked the Minister of Agriculture in how many counties agreements between the farmers
and the labourers have been registered; in how many agreements have been reached but not registered; and in how many no agreement at all has been recorded?

Sir A. BOSCAWEN: In five areas Conciliation Committee agreements have been confirmed, in 49 areas agreements have been reached at one time or other but not submitted to the Minister for confirmation, and in the remaining seven areas no agreements have so far been reached.

Oral Answers to Questions — MILK (PRICES).

Mr WALTER SMITH: 81.
asked the Minister of Agriculture whether he is now in a position to report on the subject of the appointment of a committee of inquiry to investigate the question of the great disparity in the price paid to farmers for milk and the cost to the consumer, and to suggest means by which the interests of the consumer can be adequately safeguarded?

Sir A. BOSCAWEN: I have considered the question of the appointment of a committee dealing with the supply and distribution of milk, but after consultation with the various interests concerned I do not think that the appointment of such a committee would be likely to lead to useful results. I may remind the hon Member that during recent years several committees dealing with different questions relating to milk have been appointed, and their reports contain a considerable amount of information on different aspects of the matter. The particular point mentioned in the hon. Member's question is a matter of great complexity and could not be investigated without giving compulsory powers to the body appointed for the purpose, requiring the production of the books of private firms.

Oral Answers to Questions — COUNTY AGRICULTURAL COMMITTEES (TRAVELLING EXPENSES).

Mr. ROYCE: 84.
asked the Minister of Agriculture if he is aware that the action of his Ministry in ordering the cessation of payment of travelling allowances to members of County Agricultural Committees prevents poor members nominated by the Ministry from attending meetings; and, seeing the value of the services of
this class of representation, will he take steps to remove this difficulty?

Sir A. BOSCAWEN: The question whether travelling allowances shall be paid to members of County Agricultural Committees is a matter for the decision of the county council concerned and not of the Ministry. It is true that the Ministry has decided that it will not repay such expenses in future, but there is nothing to prevent any county council from continuing the allowances if they think fit. I recognise that if the allowances are not continued the difficulty of poor members in attending meetings may be increased, but in view of the need for economy I cannot hold out any hope that the decision of the Ministry will be altered and I may point out that expenses have never been paid in respect of attendance at meetings of any other committee of the county councils.

Mr. ROYCE: Does the right hon. Gentleman recognise that his action in refusing to recognise the expenses of men of this class renders it utterly futile to appoint men who are unable to attend because of the cost?

Sir A. BOSCAWEN: I regret the decision, but I was unable to come to any other. It does not render it any more futile in the case of these committees than in the case of any other committees which are exactly in the same position.

Mr. W. THORNE: Can the right hon. Gentleman say what is the total cost of the Government in regard to this matter?

Sir A. BOSCAWEN: Perhaps my hon. Friend will give notice of that question.

Oral Answers to Questions — CATTLE (SLAUGHTER).

Lieut-Colonel A. MURRAY: 85.
asked the Minister of Agriculture whether his attention has been drawn to the prosecution recently at Nottingham of a retired police superintendent and a butcher for attempting to kill three cows in an improper manner; whether these beasts were suffering from foot-and-mouth disease; whether an inspector of the Ministry of Agriculture was put in charge of the slaughtering operation; whether a humane slaughterer was used; and, if not, whether he will direct that in all such cases in the future no slaughtering shall
be carried out except with a humane slaughterer?

Sir A. BOSCAWEN: The reply to the first part of the question is in the affirmative. The beasts in question were among a lot of 20 which were being slaughtered, because they were affected or in contact with animals affected with foot-and-mouth disease. The officer in charge had been appointed temporarily to act as an inspector of the Ministry in the emergency. The butcher was provided with a humane slaughterer, and some of the animals were despatched with it; the remainder stampeded, and it appears that owing to the difficulty of securing and roping these animals the humane killer was not used in slaughtering them. The Ministry requires all its inspectors to see that the humane killer is used for the slaughter of all animals condemned under the Diseases of Animals Acts and has provided over 300 instruments for the purpose.

Oral Answers to Questions — ST. JAMES'S PARK (REFRESHMENT PAVILION).

Mr. BOWERMAN: 86.
asked the hon. Member for the Pollok Division of Glasgow, as representing the First Commissioner of Works, whether, in view of the very long connection of the family of Mrs. Orford with the concession for the sale of refreshments in St. James's Park, he will give an assurance that Mrs. Orford will be given the first opportunity of becoming the tenant of the new refreshment pavilion to be erected in place of the present structure?

Lieut.-Colonel Sir J. GILMOUR (for the First Commissioner of Works): I am happy to give the hon. Member an assurance that every consideration will be given to any tender submitted by Mrs. Orford when tenders are invited for occupation of the new pavilion to be erected in St. James's Park.

Mr. BOWERMAN: Will this lady have the first chance?

Sir J. GILMOUR: She will have the same chance as anybody else, but will have a much better opportunity of tendering because of her previous knowledge of the circumstances.

Oral Answers to Questions — SCOTLAND.

GAME AND HEATHEE BURNING.

Lieut.-Colonel MURRAY: 88.
asked the Secretary for Scotland when legislation will be introduced dealing with the recommendations of the Game and Heather Burning (Scotland) Committee?

The SECRETARY for SCOTLAND (Mr. Munro): I am not yet in a position to add anything to the reply which I gave to a similar question by my hon. and gallant Friend on 7th April.

Major M. WOOD: Can the right hon. Gentleman say whether this Bill will at the same time deal with the question of the recommendations of the Deer Forests Committee?

Mr. MUNRO: I think it is very likely that there will be two separate Bills.

EDUCATION COMMITTEE CLERKS (PENSIONS).

Mr. G. MURRAY: 89.
asked the Secretary for Scotland under what regulations clerks of education committees in Scotland have become pensionable officers; what amount is at present expended by the Treasury on such pensions in Scotland; what is the maximum sum expected to be expended per annum on this service; whether, in the majority of instances, this post is held by the county or town clerk; and whether there was any demand from these officials to be placed on the pension list?

Mr. MUNRO: My hon. Friend is under a misapprehension in supposing that the clerks of education authorities and committees in Scotland, as such, possess any pension rights. The remainder of the question, therefore, does not arise.

HOUSING (CHILDREN BESTRICTIONS).

Sir ROBERT CLOUGH: 90.
asked the Minister of Health whether his attention has been called to the growing frequency of notices that houses and rooms will not be let to tenants with children or with the possibility of having children; and whether, if such a policy is contrary to public interests, he will consider the desirability of introducing legislation on the subject to make it illegal to withhold accommodation on such grounds?

Sir A. MOND: I have seen some references in the Press to notices of this kind, but I doubt whether it would be practicable to deal with the matter by legislation.

GAS POISONING.

Sir R. CLOUGH: 91.
asked the Minister of Health whether his attention has been called to the frequent cases of poisoning by carbon monoxide gas; whether he has seen the statement that this is apparently due to the new type of gas manufactured; and whether, in any event, he will investigate the frequency of these cases so as to reassure the public and avoid, if possible, any further recurrence?

Mr. BALDWIN: I have been asked to answer this question. I may remind my hon. Friend that the Board of Trade appointed a Special Committee to investigate this subject, and have already given effect to the recommendation of that Committee. All cases of fatal accidents attributed to gas poisoning are reported to the Department, and reports thereon are made to them by the medical officers of health. I should add that there has not been any marked change recently in the proportion of water gas supplied by gas undertakings.

DENTISTS (REGISTRATION).

Lieut.-Colonel CROFT: 92.
asked the Minister of Health whether his attention has been called to the neglectful manner in which the Dental Board are dealing with applications for registry which have extended over months; whether, after letters have been sent and satisfactorily answered, the same letters as the originals are sent out by the Board months afterwards; whether, instead of speedily completing the registry, applicants are kept in suspense; and what steps he intends to take to remedy this state of affairs?

Sir A. MOND: I have not received any previous complaints of this kind. I have no jurisdiction over the administration of the Dental Board, but if the hon. and gallant Member will let me have particulars of the cases to which he refers, I will have inquiry made. I may add that the rules made by the Board require the names of applicants to be published for a month before admission to the register.

GRETNA FACTORY.

Major W. MURRAY: 93 and 94.
asked the Financial Secretary to the Treasury (1) whether, for the purpose of selling the Gretna factory and townships en bloc, he has caused an independent valuation of the subjects for sale to be made by any private and neutral firm of valuers, or whether the Treasury is guided in this matter solely by the valuation arrived at by the Disposal Commission's officials;
(2) whether he is aware that a strong feeling exists in Gretna and the surrounding district against any attempt to sell this property piecemeal until an independent valuation of the factory, townships, and plant has been obtained and made public; whether, in regard to a piecemeal sale, any calculation has been made of the length of the period over which such sale will last, of the cost of maintaining the factory, plant, and villages, of supporting the unemployed during such period, and of the losses which will accrue from the deterioration of plant, machinery, houses, etc., now increasing; and, if so, can he state the result of such calculation?

Mr. YOUNG: The answer to the first question is that the Government has been guided by the expert opinion of highly qualified officials of the Disposal and Liquidation Commission, and is satisfied that these officials are thoroughly competent to advise. In answer to the second part, full consideration has been given to the cost of selling Gretna other than in one lot, to the present unemployment in the district, and to the depreciation in value which may reasonably be expected from normal wear and tear in property of this kind. After, however, taking all such matters into consideration, I am satisfied that such proposals as have been made for the acquisition of the factory are totally inadequate.

Major MURRAY: Have not certain persons who have made offers asked for an independent valuation in order to reconsider their offers?

Mr. YOUNG: I am not aware of any proposal for an independent valuation because of any serious negotiations before the abolition of the factory.

3½ PER CENT. CONVERSION LOAN.

Mr. WADDINGTON: 96.
asked the Financial Secretary to the Treasury what was the average price of issue of the 3½ per cent. Conversion Loan; what was the amount of Sinking Fund to be provided at the end of the financial year in accordance with the terms of issue; whether the amount has yet been used to repurchase part of the loan; and, if so, what is the average price at which the repurchases have been made?

Mr. YOUNG: 3½ per cent. Conversion Loan was created in May, 1921, in exchange for National War Bonds at 160 to 163 for each£100 nominal of Bonds according to the different maturities of the Bonds exchanged in April, 1922, in exchange for 5½ per cent. Treasury Bonds A and B at 146 and for 5 per cent. Exchequer Bonds, 1922, at 136. It is now being offered in exchange for National War Bonds due in October, 1922, and April, 1923, at 134 for each£100 nominal of Bonds exchanged. The Sinking Fund due to be set aside as on 1st April, 1922, to be employed in purchasing stock for cancellation in the present half-year amounted to£2,660,678 13s. 11d., of which£425,000 has been applied thus far. Particulars of the amount of stock purchased with the Sinking Fund will be issued in due course.

INCOME TAX (LIEUT.-COLONEL LIDDELL).

Sir W. DAVISON: 98.
asked the Financial Secretary to the Treasury whether he is aware that a sum of£150 has been deducted for Income Tax from the capital sum of£500 which was awarded to Lieut.-Colonel Guy Liddell three years after his claim and without interest, by the Royal Commissioners on awards to inventors for the use of his patent; and what is the justification for this large deduction from the award of a capital sum which has been owing for a prolonged period?

Mr. YOUNG: The award to which my hon. Friend refers was made to Lieut.-Colonel Guy Liddell on the 6th January, 1922. I understand that the facts relating to the award show that it was in the nature of extra remuneration paid to Colonel Liddell, and therefore properly assessable to Income Tax under Schedule E.

Sir W. DAVISON: Is the right hon. Gentleman aware that this award will be reduced in amount because this gentleman served in the Army, and if that is the reason for the reduction in the award, ought he not to go under the Is. Army Income Tax and not the 6s. tax of the civilian?

Mr. YOUNG: If there are any circumstances in the case to which the hon. Member would like to call my attention, I shall be glad to hear them.

NAVAL AND MILITARY PENSIONS AND GRANTS.

NAVAL OFFICERS' WIDOWS.

Captain BOWYER: 99.
asked the Minister of Pensions for what reasons widows of royal naval officers who served during the War, but who had previously retired, and, after being called up for the War, died as a result of their war services, are not allowed to claim an alternative pension; and, seeing that if the husband had been on the active list of the Royal Navy, the widow would be allowed to draw an alternative pension, will he speedily rectify this injustice?

The PARLIAMENTARY SECRETARY to the MINISTRY of PENSIONS (Major Tryon): The widows of retired naval officers re-employed for the War, and dying through war service, are not debarred from consideration for alternative pensions under the Order in Council.

FUNDING.

Mr. TERRELL: 101.
asked the Minister of Pensions whether the Government have now considered the proposals for the funding of pensions; and if he has any statement to make on the subject?

Mr. YOUNG: All relevant matters have been considered in connection with this year's Financial Statement.

TREATMENT ALLOWANCES.

Sir F. HALL: 102.
asked the Minister of Pensions whether wounded or disabled men who are in receipt of treatment allowances, if they have to absent them selves from treatment owing to illness not directly attributable to their service disability, are deprived of these allowances;
and, if so, whether, in view of the hardship caused by this Regulation, he will consider as to its modification?

Major TRYON: Treatment allowances are necessarily restricted to periods during which the man, in consequence of a course of treatment recommended for his war disability, is unable to provide for his own support. Where for any reason the man is unable to continue his treatment, my right hon. Friend has no power to authorise allowances. In such a case the man would, of course, resume his pension.

NAVAL RETIRED PAY (COMMUTATION).

Sir B. FALLE: 103.
asked the Parliamentary Secretary to the Admiralty when it is proposed to revert to the rates for commutation of retired pay that were in force prior to July, 1920?

Mr. YOUNG: At present the rate cannot be reduced without loss to the State. I cannot say when it may be possible to reduce it.

IRELAND.

PARCELS (CUSTOMS DECLARATION).

Mr. LINDSAY: (by Private Notice) asked the Chancellor of the Exchequer whether the Treasury have issued an Order that senders of parcels posted in Northern Ireland for places in Great Britain and the Isle of Man must furnish a Customs declaration; if so, what is the object of the Order, and what is the authority for treating Northern Ireland differently from any other part of the United Kingdom?

Mr. YOUNG: I think there is some misapprehension in this matter, and I am glad to have this opportunity of explaining it. Arrangements have been made to obtain, as from to-day, statistics as to dutiable goods passing from Great Britain (including the Isle of Man) on the one hand, to Ireland on the other, and vice versâ. The object is to ascertain the share of Customs and Excise revenue attributable to Great Britain, Northern Ireland, and the Irish Free State respectively, in accordance with the Government of Ireland Act, 1920, and the
Irish Free State (Agreement) Act and the Order in Council made thereunder. The obtaining of statistical declarations from senders of post parcels from Great Britain to Ireland and from Ireland to Great Britain is a necessary complement to the procedure introduced with regard to goods carried as ships' cargo. Northern Ireland is not being treated exceptionally in this matter, the arrangements being applicable throughout Great Britain and Ireland.

Mr. LINDSAY: Is this arrangement going to be permanent?

Mr. O'NEILL: Is it not a fact that a very small quantity of such articles pass through the parcels past, and is it worth while subjecting the public who send parcels by post to this great inconvenience.?

Mr. YOUNG: Some such arrangement as is suggested is necessary as long as there is any necessity to calculate the revenue attributable to any part of Ireland. It is recognised that some degree of inconvenience must be imposed owing to the gathering of such statistics, but a re-adjustment has already been made which, I think, will have the effect of avoiding a great deal of the inconvenience in respect of firms which do not usually send parcels of dutiable goods, and I believe that this will go a long way towards remedying the inconvenience.

OUTRAGES.

Rear-Admiral ADAIR: asked the Lord Privy Seal (1) if he is aware of the facts which led up to the death of Mrs. W. J. Talbot, of Mount Talbot, County Roscommon, on 9th or 10th April; if so, will he state these facts and say what action the Government have taken in connection with them;
(2) if ho is aware of the facts as to the forcible ejectment from their holdings of a large number of Protestants in the parish of Tinahee, Queen's County, in the course of the last few days; and, if so, will he state these facts and say what action the Government have taken in connection with them?

The CHIEF SECRETARY for IRELAND (Sir Hamar Greenwood): I regret that I am unable to deal with this ques-
tion at such short notice. I am having inquiries made and shall be glad if the hon. and gallant Member will repeat the question later in the week.

Rear-Admiral ADAIR: I will repeat the question on Thursday, but I should say that the notice was handed in at No. 11, Downing Street, yesterday forenoon, with special instructions to have it opened by the first Secretary who came in, in the absence of the Lord Privy Seal.

Sir W. DAVISON: May I remind the right hon. Gentleman that I put a similar question a few weeks ago, and that he said that he would ascertain the facts from the Provisional Government? As this is a matter of urgency for the loyalists of Southern Ireland, what steps have been taken for their protection, considering that their property and lives are in hourly danger?

MURDERS, CORK.

Colonel NEWMAN: (by Private Notice) asked the Chief Secretary for Ireland whether he has been in communication with the Government of the Irish Free State as to the massacres of Protestants in South-West Cork, and what information he can give to the House?

Sir H. GREENWOOD: I have been in communication with the Provisional Government with regard to this, and I am assured that no effort will be spared to bring the perpetrators to justice.

Rear-Admiral ADAIR: May I ask the Lord Privy Seal of what avail it is to refer these outrages to the so-called Provisional Government?

Sir W. JOYNSON-HICKS: Would the right hon. Gentleman state whether in any single case of these murders there has yet been any prosecution instituted?

Sir H. GREENWOOD: I must have notice of that question.

Mr. RONALD McNEILL: In view of the answer given, that the right hon. Gentleman has made inquiries of the Provisional Government, may I ask whether His Majesty's Government here have now totally abandoned these loyalists, who are exposed to expropriation and assassination?

EMPIRE SETTLEMENT [MONEY].

Committee to consider of authorising the payment out of moneys provided by Parliament of any expenses of the Secretary of State under any Act of the present Session to make better provision for furthering British Settlement in His Majesty's Oversea Dominions, so, how ever, that the aggregate amount expended by the Secretary of State under any scheme or schemes under any such Act shall not exceed one million five hundred thousand pounds in the current financial year, or three million pounds in any subsequent financial year, exclusive of the amount of any sums received by way of interest on, or repayment of, advances previously made—(King's Recommendation signified)—To-morrow. —[Colonel Leslie Wilson.]

BUSINESS OF THE HOUSE.

Resolved,
That the Proceedings of the Committee of Ways and Means be exempted at this day's Sitting from the provisions of the Standing Order (Sittings of the House)."— [Mr. Chamberlain.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE A.

Sir SAMUEL ROBERTS reported from the Committee of Selection: That they had added the following Members to Standing Committee A (in respect of the Local Government and other Officers' Superannuation Bill): Sir James Greig and Mr. C. D. Murray.

Report to lie upon the Table.

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[MR. JAMES HOPE in the Chair.]

FINANCIAL STATEMENT.

The CHANCELLOR of the EXCHEQUER (Sir Robert Home): In presenting to the Committee my financial proposals for the current year, it is essential that I should give some brief survey of the year that is past. I do not think I shall be regarded as exaggerating if I say that it proved to be one of unexampled trial and difficulty for industry and commerce, and therefore also for finance. Its first three months were swept by the greatest industrial stoppage which this country, or perhaps any other country, has ever known. That occurrence had a disastrous effect upon our trade, and serious results upon the revenue of the year. But, apart from that refractory incident, there was enough in the natural flow of events to cause great anxiety. The trade boom which followed upon the War had given place to a steep and sudden slump. Many people were quite unready and unprepared. It is true that those who had reflected upon the problem anticipated that the War would be followed by a spell of activity and then by a period of depression, but I think that no one, or at least few people, anticipated that we should have only a spasm of activity, and that paralysis would supervene so quickly. Most men calculated that the boom would last long enough for them to make sufficient profits to justify them in embarking on new enterprises or in extending and developing the old. But the effects of the great convulsion to which the world has been subjected upset all calculations based upon the previous experience of mankind. Some countries which used to buy from us were crippled, some broken, some derelict, and the condition of the exchanges made it impossible, in many cases, for commerce to take place between the nations. The purchasing power of our customers was rapidly exhausted, and in the result very many of our manufacturers found themselves saddled with an increased capital
outlay upon which there was no return, or with accumulated stocks which there was no hope of liquidating except at disastrous sacrifices.
Unemployment, as was inevitable, followed in the wake of these troubles. Its gravity and its extent throughout the whole of the past year have been not only a source of constant anxiety to the people of this country, but also a cause of great expenditure for the State. That we should have come through these distresses without worse calamities than we actually endured is an eloquent testimony to the soundness of the country and the solidity of its financial position. In this connection I would like to pay my tribute to the banks of this country. It is true that they have not entirely escaped criticism, but I do not know anybody or any institution in these clays which does escape. As one whose daily duty it has been closely to observe the movement and vicissitudes of money and business, I have a clear conviction that throughout this crisis—it has been a crisis—this country owes more than has been adequately stated to the soundness of our banking system and to the ability and character of the men who control it.
We have finished the depressing year 1921–22 with less misfortune than I had anticipated, and certainly with less disaster than my right hon. Friends opposite encouragingly predicted for me. I can recall a Friday afternoon in the month of July last year when my Noble Friend the Member for Hitchin (Lord R. Cecil) wrapped himself in impenetrable gloom over the Budget. His "native hue of resolution" was "sicklied o'er with the pale cast" of pessimism, shared by my right hon. Friend the Member for Peebles (Sir D. Maclean), who dramatically assured the House that the Budget that day lay shattered in ruins. I was suitably impressed by the pronouncement of these comforters, but they never quite convinced me, and I think the Committee will agree with me, when we have reviewed the financial situation for the year, that the country is entitled to take some pride, in view of the conditions which I have described, in the out-turn of the year's finances.

REVENUE AND EXPENDITUER, 1921–22.

4.0 P.M.

I proceed, accordingly, to deal with the figures which hon. Members have
before them in the White Paper. In order to make comparisons clear, I have in the Paper allocated to Supply Services the£97,000,000 which, though not included in last year's Estimates as originally presented to Parliament, was known at the time of the Budget to be likely to be needed for Supply, and was provided for in the Budget calculations. The main circumstances which made calculation at that time impossible were the unknown length and cost of the coal stoppage, which had then begun, and the settlements which were then in negotiation between the railway companies and the Government arising out of the War agreements. The Committee will remember that, while the Estimates showed a balance of revenue over expenditure of£177,000,000, it was indicated in the Budget speech that£97,000,000 would probably be required for expenditure foreseen but not then capable of exact calculation, and that the remaining£80,000,000 would be available for the reduction of Debt. I am very anxious to make this point clear, because one sees persistently reiterated in certain quarters the statement that we budgeted for a surplus of£177,000,000 last year. I really fail to understand why the state of the country's finances should be represented as being worse than it is simply because the calculation was made by a Minister in a Government with which some people happen to be in disagreement. With this adjustment, the original Budget figure for Supply Services in 1921–22 becomes£668,000,000 plus£97,000,000, or£765,000,000, which I shall hereafter call the Budget Estimate for Supply Services.

The total estimated expenditure anticipated in the year, including Consolidated Fund Services, was£1,136,000,000. The Committee will see, accordingly, that the Budget anticipated a revenue of£1,216,000,000, an expenditure of£1,136,000,000, and a surplus for redemption of debt of£80,000,000. The actual results are a revenue of£1,124,880,000, or£91,000,000 less than estimated, an expenditure of£1,079,187,000, or£57,000,000 less than estimated, and a surplus for debt reduction of£45,693,000. Having regard to the unparalleled circumstances of the year, I think that to be able to devote so large a sum as that towards
the reduction of debt is a record which is very creditable to the country.

I take now the details of the revenue and expenditure. Taking the Revenue first, the first item to which I wish to refer is Customs and Excise. The Budget Estimates for Customs and Excise Revenue was£323,000,000, namely,£126,800,000 for Customs and£196,200,000 for Excise. Some hon. Members considered this far too high a figure in view of the coal stoppage which had begun and the state of depression in which the country was, but, as the Committee now knows, the Estimate was exceeded by a substantial sum. The amount paid into the Exchequer was£130,052,000 in respect of Customs and£194,291,000 in respect of Excise, making£324,343,000 in all, or£1,343,000 more than the Budget Estimate. Although on the general total there was a surplus, there were, of course, variations in detail. For example, beer realised almost£2,000,000 more than the Budget Estimate. Tobacco, sugar, and tea also realised more than the Estimate. Spirits were under the Estimate by£7,500,000, and Entertainments Duty by about£1,500,000. There was an increase of£2,000,000 in the yield of the Motor Tax, but it is balanced by a corresponding issue to the Road Fund.

I come now to Inland Revenue. The Inland Revenue Duties as a whole fell below the original Budget Estimate by£110,726,000. This almost entirely arises on the Excess Profits Duty, which discloses a shortage of£89,548,000. The Corporation Profits Tax failed by£12,484,000 to realise the Estimate, and Income Tax by£11,613,000. In each case, the deficiency must be attributed to trade depression.

I hope the Committee will allow me an observation on some of these results. The unpaid arrears of Excess Profits Duty amounted at the beginning of last year to£287,000,000 and£131,000,000 net was assessed during the year, making the large total of£418,000,000. But the gross collection—this is the critical amount— amounted only to£122,000,000, of which£92,000,000 was exhausted by repayments. The unpaid arrears outstanding at the end of last year amounted to£296,000,000. Many of these arrears are subject to adjustment on appeal or otherwise, but the payments expected ultimately to be received by the Revenue are considerable. The position of the Excess Profits Duty is very exceptional, and, before I sit
down, I hope to make a certain proposal with regard to it. Taking all the circumstances into account, I think that we shall agree that the Income Tax yield was not unsatisfactory. Indeed, it is remarkable in a year like that through which we have come that we should have collected nearly£399,000,000 in Income Tax and Super-tax. That, it seems to me, to be a tribute not only to the financial resources of the country, but also to the patriotism of the people. Supertax produced£1,730,000 more than was expected, and a surplus of£4,191,000 was realised on the Death Duties. Stamps fell short of the estimate by£1,362,000.

The only other head of revenue is that of Miscellaneous Receipts, upon which such gloomy prognostications were pronounced in the Debate to which I have referred. The main items in the total of£197,000,000 realised from Miscellaneous Receipts are these: Excess interest on currency note account amounts to£17,500,000, Disposal Commission receipts to£42,750,000, payments for troops of occupation in Germany,£44,500,000, Ministry of Shipping receipts, nearly£29,000,000, Ministry of Food receipts, including Sugar and Wheat Commissions,£19,000,000. In total, the revenue was less than we anticipated by£91,000,000 odd, of which£89,000,000 was accounted for by the failure of the Excess Profits Duty.

Happily, expenditure, as I have indicated, also proved less than the estimate. The Consolidated Fund Services show a saving on the Estimate of just over£11,000,000, which is accounted for by the more favourable rates at which we have been able to place Treasury Bills. That rate is due to many causes, but, among others, undoubtedly to the system of tender which we re-introduced in the early part of the last financial year and which has had most successful results.

The Supply Services show a saving, as compared with the adjusted Budget Estimate of£765,000,000, of£46,000,000, but, to avoid confusion, it is necessary that I should make a comparison also with the final estimates. Allowing for the reduction in the Army Estimates by transfer to Middle East Estimates, the Supplementary Estimates and Excess Votes presented during the year, in fact, amounted to£121,000,000, or£24,000,000 more than we anticipated at Budget time. On this basis, the net voted Supply was
£789,000,000, and the saving,£69,000,000. Of this total,£4,000,000 was on the Navy, nearly£5,000,000 on the Air Force, and£14,000,000 on pensions, mainly due to an over-estimate of claims. The rest, some£46,000,000, is scattered over a large number of Civil Service Votes and is in the main due to the pressure which has been exercised by the Government in the course of the year with a view to curtailing all avoidable expenditure. It is due to that saving that we are able to put£45,000,000 at the end of the year to the reduction of debt. I do not think I am putting the matter too strongly when I say that this is a remarkable saving in the course of the year.

NATIONAL DEBT.

Having dealt with the fortunes of the year, I ought to give the Committee some indication of the Debt position. The surplus of revenue over expenditure in 1921–22, as I have said, was£45,693,000. This has been applied to reduction of debt, together with£25,000,000 which was included for debt reduction on the expenditure side of the Budget. Adding to these sums certain other repayments, such as reduction of the Civil Contingencies Fund, the total applied to the Debt reduction in the year was£88,466,000. So much for what we have done in reducing debt during the year. How did it leave the total of dead-weight Debt? The maximum figure reached by the deadweight National Debt of the country was on 31st December, 1919, when it amounted to the huge total of£7,998,000,000. By the 31st March, 1921, this figure had been reduced to£7,574,358,000. The corresponding figure on the 31st March, 1922, was, as near as I can estimate it,£7,654,500,000. The increase during the year in the nominal debt was£80,142,000. The explanation of the fact that there has been an increase in the nominal total, in spite of the devotion of large sums to the redemption of debt, is, of course, that the issue of 3½ per cent. Conversion Loan brought up the nominal total of the debt while it did not in any way increase the real burden. In point of fact, the real burden of the debt has been decreased considerably in the course of the year, not merely by the payments in cash of sums for redemption, but also because of the change in character, so much so that, apart from the special provisions for the interest on our debt to
the United States of America, to which I shall refer later, it has been found possible to reduce the Estimates for interest and management of debt in 1922–23 by£17,000,000, as compared with the Estimate for 1921–22.

Mr. ASQUITH: What is the total?

Sir R. HORNE: £335,000,000. While, therefore, we cannot point to any reduction in the nominal total of debt during 1921–22, we have considerable reason for satisfaction in the improvements effected both as regards internal debt and external debt, with which I shall now proceed to deal.

EXTERNAL DEBT.

I take external debt first. A year ago it stood at£1,161,563,000; in March, 1922, the figure was£1,090,184,000, a reduction of£71,379,000. All these figures are at par of exchange. This sum may be regarded as now being represented by an equivalent sum of internal debt. As my right hon. Friend the Leader of the House said, in making the Budget speech last year, the transformation of external debt into internal debt is a definite gain to the national wealth. We then pay our interest not to people outside the country but to ourselves, and in this connection it is gratifying to be able to record that in the three years since 31st March, 1919, we have reduced external debt by no less than£274,666,000. Apart from a few small market debts in the United States, our external obligations consist only of our debts to the United States Government and the Canadian Government and to certain Allies who owe us much more than we owe them. The above figures, however, do not include interest temporarily in suspense on debt due to the United States. There is one matter to which I should like very briefly to draw the attention of the Committee. The improvement in the value of the£1 sterling on the exchange markets of the world is one of the first fruits of our redemption of external debt. How great a boon this is, to the taxpayer and the trader of this country, may be illustrated by the two following sets of figures:

Our total debt to the United States of America is 4,166,000,000 dollars, which, valued at 3 dollars 20 cents to the£1— the figure to which the exchange fell two years ago—is equivalent to£1,301,875,000.
At an exchange of 4 dollars 40 cents to the£1—it is rather better than that to-day—the sterling equivalent is about£946,820,000, representing a saving of£355,000,000 odd. When the exchange is restored to par, as I hope it will be before very long, the sterling equivalent will be£856,030,000. So much for the taxpayer. The trader and the consumer also benefit. Our direct exports to the United States of America are comparatively small in proportion to our imports of raw material and food from that country. The dollar value of our purchases of foodstuffs and cotton alone from the United States during 1921 was approximately 461,000,000 dollars, representing at 3 dollars 20 cents to the£1 a sum of£144,000,000, and at 4 dollars 40 cents to the£1 the figure is reduced to£104,700,000, showing a difference of nearly£40,000,000 sterling. This question of the exchange and its effect upon the fortunes of the country is a very interesting one, but it is not a matter which can be dealt with in a Budget speech. I think that the figures which I have given are sufficiently striking.

INTERNAL DEBT.

As regards the internal debt there has been a very satisfactory reduction both in the floating debt and in the amount of early maturing debt. As everyone can understand, these two forms of debt are the chief anxieties of a Chancellor of the Exchequer. A year ago the floating debt was£1,275,000,000. At 31st March, 1922, this figure had been reduced to£1,029,515,000, or a reduction of about£246,000,000, in the course of the year.

Mr. ASQUITH: It has been reduced further since?

Sir R. HORNE: Yes, it has been reduced further since. I take now the question of maturing debt, which is one of almost equal anxiety. A year ago the amount of internal debt other than floating debt maturing in the four years 1921–22 to 1924–25 was£886,957,000. I leave out of account National Saving Certificates, which are in a special category. Included in this figure is a sum of£12,257,000, representing premiums due on the redemption of National War Bonds. The amount of internal debt maturing in the four years 1922–23 to 1925–26, again including premiums on National War Bonds and excluding Savings Certificates, is
£626,830,000. Formidable as this sum is, the reduction of£260,127,000 as compared with a year ago, is eminently satisfactory. I have every hope that the year 1922–23 will bring a still further improvement, both as regards floating debt and other maturing debt. Thanks to the improvement in the market price of British securities—although this is, in part, unfortunately due to trade depression—the taxpayer is securing a substantial alleviation of the burden of interest on floating debt, and there is reason to hope that before very long it may be possible to effect the conversion of early maturing debt into funded debt on terms which will further reduce the annual liability for interest.
In any case the position in 1922–23 has been vastly improved. Instead of£232,000,000 bonds maturing in 1922–23— the figure given in the Budget of a year ago—the figure has been reduced on the 1st April, 1922, to£155,000,000. Since that date, and perhaps this will interest the Committee, though it does not apply to the last year, not only have we more than covered by new five year bonds, issued by tender, the£21,000,000 of 5 per cent. Exchequer Bonds, falling due on the 1st April, 1922, but£26,339,000 of National War Bonds falling due on 1st October, 1922, have been exchanged by their holders under the option attaching to those bonds into 5 per cent. War Loan 1929–47. The conversion now being offered to holders of National War Bonds due in October, 1922, and April, 1923, is a further step in the same direction. Accordingly the record of 1921–22 in regard to debt is this, that we have greatly eased our position by reducing our external debt by£71,000,000, by reducing our floating debt by£246,000,000, by reducing the maturing obligations which confront us in the next four years by£260,000,000. In addition to these desirable changes in the character of our debt we have devoted£88,000,000 to reduction of its dead weight burden, and that is a record on which we may congratulate ourselves.

EXPENDITURE, 1922–23.

I now come to the financial year 1922–23, and I begin with the estimates of expenditure. The figures for the Supply Services are already before the Committee. They are for Ordinary Services,£460,000,000 odd, and for Special Services,
£61,000,000 odd, making a total of£521,500,000. The circumstances of the year compel me to make some further allowance for contingencies. There are many matters which still have to be dealt with in connection with the Irish settlement. There are claims for compensation with regard to which a Commission is to sit for the purpose of assessment. There is a grant to Northern Ireland of£500,000 for unemployment. There is an added million for overseas settlement, and there has already been a Supplementary Estimate of 3½ millions in connection with the new unemployment scheme.

Just as much as my hon. Friend the Member for Wood Green (Mr. G. Locker Lampson), I deprecate the use of Supplementary Estimates, but it is quite obvious that in present conditions it is necessary to make some provision for them; but I think the worst objection to Supplementary Estimates disappears, if at least we contemplate our contingencies in advance and make allowance for them. I accordingly have allocated a sum of£25,000,000, which I think will be adequate to cover these contingencies. Accordingly the total anticipated Supply expenditure is raised by the addition of that figure to£546,500,000. There will be other opportunities for discussing the Estimates, but I want to make one or two comments in passing. In the first place, the Committee must keep clearly in mind that our Estimates for 1922–23 no longer include, apart from some special grants, provision for Southern Ireland or for the transferred services in the case of Northern Ireland. This accounts for a reduction, more than counterbalanced by loss of revenue, of something like£24,000,000. In the second place, even with the additional£25,000,000, the total of£546,500,000 estimated expenditure is£218,500,000 below the adjusted Budget estimate of last year —and I hope the Committee will observe that figure—and£242,500,000 below the final Estimates for last year. I think that figure will furnish a sufficient reply to those who, with a persistence which now almost amounts to malevolence, reiterate the statement that this Government is doing nothing for the reduction of expenditure.

I perhaps ought to remind the Committee that the figure of reduction in the estimates of expenditure to which I referred in the course of the Debate on
the Report of the Geddes Committee, the figure of£181,000,000, is not comparable with the figure which I have now given. In the first place, it included Ireland, and in the second place it dealt only with Ordinary expenditure, but the figures I have now given exclude Ireland and deal both with Ordinary and with Special expenditure. I wish also to make it plain that even upon these figures the Government is in no wise desisting in its efforts to effect reductions. Indeed, I am confident that in the course of the present year, as we did in the course of last year, we shall succeed in making very appreciable reductions in expenditure, and still more in the year following. It is foolish to expect that you can do everything at one blow, even with an axe. The Government was unable to accept all the recommendations of the Geddes Committee, for reasons which commended themselves to both sides of the House, although the reasons were not always the same, but that alternative methods of curtailment must be discovered if the Geddes recommendations cannot be adopted is quite certain, especially looking to the added burdens that we shall have in the year 1923–24, and in this matter I ought to get the support of the House, first, in resisting new expenditure, however laudable, as well as in cutting off branches of services which, good and useful as they may be, are of such a character as at the present time we cannot afford to keep up.

Continuing my review of the estimated expenditure, I put the Consolidated Fund Charges at£363,438,000, of which interest on debt accounts for£335,000,000. That is the figure I gave to my right hon. Friend the Member for Paisley a moment ago. I ought to make it clear that while this figure includes£25,000,000 for interest on debt to the United States Government from October next, it includes no provision for debt redemption apart from certain terminable annuities. To this subject I will return later.

Mr. ASQUITH: Where is the£25,000,000 to America—in the£335,000,000?

Sir R. HORNE: It is an item in that general total. The total expenditure accordingly, exclusive of debt redemption, I estimate at£910,000,000 odd, made up of£363,438,000 for Consolidated Fund Charges and£546,631,000 for Supply Services. Adopting the division which was
made in the Budget statement last year, I divide this total of£910,000,000 into£823,800,000 for "Ordinary Expenditure,"£61,200,000 for "Special Expenditure," and£25,000,000 for contingencies.

REVENUE, 1922–23.

Turning now to the subject of revenue, on the existing basis of taxation I estimate the revenue at£956,600,000, of which£866,600,000 is Ordinary revenue and£90,000,000 Special revenue. These figures naturally exclude revenue attributable to the Irish Free State and revenue transferred to Northern Ireland. Taking now the items of revenue, the Customs and Excise Estimate is affected by the exclusion of Ireland to the extent of about£18,000,000, but apart from that I contemplate a fall in revenue. Nearly every item in Customs and Excise has fallen off in yield in the last three or four months. I would not dogmatise about the causes, but the opinion I have formed is that while consumption kept up in a remarkable degree during the course of the year 1921, the savings of the people gradually became exhausted, and the spending power is now curtailed. I believe that to be the cause of the falling revenue, and we cannot anticipate that until things have considerably changed for the better we shall have any increase under that particular head of revenue. In these circumstances, I am putting my total Estimate for Customs at£117,250,000, and for Excise at£160,750,000, making a total of£278,000,000 in all. This is a decrease of£46,343,000 as compared with the receipts of last year, about£18,000,000 of which, as I said before, is due to loss of revenue from Southern Ireland.

Turning to Inland Revenue, the Inland Revenue, again excluding Ireland other than Northern Ireland Reserved taxes, I estimate at a total of£481,000,000, as against an estimate last year (including Ireland) of£632,000,000 and a realised figure of£521,000,000. The details of these figures are as follow:



£


Death Duties
48,000,000


Stamps
18,250,000


Land Tax, House Duty and Mineral Rights Duty
3,000,000


Income Tax and Super tax
362,200,000


Corporation Profits Tax
19,750,000


Excess Profits Duty
29,800,000

The other Revenue items are as follow:



£


Motor Vehicle Tax
10,600,000


Post Office
60,275,000


Crown Lands
750,000


Sundry Loans
14,000,000


Ordinary Miscellaneous Receipts
22,000,000


Special Receipts
90,000,000

On the existing basis, therefore, and after allowing£25,000,000 for Supplementary Estimates, I am left with a Revenue of£956,600,000 and an expenditure of£910,000,000, giving us a surplus of£46,600,000, but this, as I have said, is without making any provision for the redemption of debt.

Lieut. - Commander KENWORTHY: What are the special receipts?

Sir R. HORNE: They realised£170,000,000 this year, but I am putting them at£90,000,000 for next year.

Lieut. - Commander KENWORTHY: Are German reparations included?

Sir R. HORNE: German reparations were in the amount last year, but there is no amount estimated for German reparations in the present year. We have always treated the possibility of sums coming from Germany as windfalls. It is very much wiser.

ENTERTAINMENTS DUTY.

Before I address myself to the major questions upon which the Committee is probably anxious to obtain information, I will deal with certain minor modifications. As regards Entertainments Duty, a Resolution is necessary to make the law clear that the duty is imposed on payments for admission to an entertainment when they are made to a person other than the proprietor of the entertainment or when they take the form of rent paid for the primary purpose of obtaining admission. The revenue involved is insignificant. This change is necessary only to clear up what at the present moment is regarded as a doubtful point in the law, as in cases where a person rents a whole stand at a racecourse in order to entertain his friends. Is he the proprietor of the entertainment in the sense in which he ought to be liable for the Entertainments Duty?

CORPORATION PROFITS TAX.

There is also a matter arising out of Corporation Profits Tax with which I must trouble the Committee. It will be in the recollection of the Committee that when the Corporation Profits Tax was introduced there were exempted for a period of three years from its provisions statutory companies, like railway companies, and other public utility undertakings. That period expires on the 31st December of the present year, and since the conditions which led to the exemption being granted are still in existence, I propose that the exemption should be extended for a period of three years.

INCOME TAX LAW.

There are also a few important alterations in the Income Tax law and a few minor modifications which I have to submit for the approval of the Committee. I will deal with them in order. A decision of the House of Lords last summer has laid down in effect that owing to a loophole in the law in cases where interest is paid upon securities or money without deduction of Income Tax the Exchequer must lose Income Tax on the interest for one year out of any period of years for which the security is held by an individual taxpayer. This is a question which arises in many instances, but chiefly in connection with various Government securities issued during the War, and I propose that this illogical condition of the law should be altered. Another decision of the House of Lords given very recently has overthrown the practice of 60 years in regard to the basis of assessment to Income Tax of many of the employés of public companies and the like. For reasons with which I need not trouble the Committee in detail, this decision has rendered urgent a reform in the method of assessment of employés, the necessity for which had already impressed the Royal Commission on the Income Tax two years ago. In order to regularise the position, I shall propose legislation for basing the Income Tax assessment of all employés upon their salary or remuneration for the current year. This will result —in the beginning at least—in a loss of revenue to the Exchequer, but it will get rid of the complaints which have been made as to the disparities in the methods of assessment, and will put all employés in that category on the same basis.

I wish also to direct the attention of the Committee to certain instances of legal avoidance of Income Tax and Super-tax, which have recently become so prevalent as to produce, until they are corrected, startling inequalities in the incidence of taxation as between different taxpayers. I think it is fairly generally known that many people, by creating temporary or revocable trusts, have succeeded in avoiding their due share of Income Tax and Super-tax. Some people achieve the same end by setting up a one-man company, and in other directions, which I need not particularise, various devices are being adopted in order to avoid the intention of the law, which the mass of people are subject to. I think most people will recognise that it is not fair that those who are clever enough to find ways to do these things should benefit at the expense of others. Accordingly, I propose to introduce legislation, which, I hope, will commend itself to the Committee.

RE-ASSESSMENT OF LAND AND HOUSE PROPERTY.

Turning now to another topic, hon. Members are, no doubt, aware that there has been no general re-assessment of land and house property to Income Tax, Schedule A, outside the Administrative County of London since 1910. In the ordinary course, a re-assessment would have been made in 1915, but War conditions rendered that impossible. I propose a re-assessment to come into force in 1923–24. This re-assessment, owing to the great changes which have taken place in the value of land and houses, will involve an immense amount of work, and in England and Wales must be spread over a longer period of time than on previous occasions, and I shall, accordingly, submit for the approval of the Committee arrangements under which the return forms will be issued, and the valuation work commenced in the course of this year, although the assessments will not become operative until next year. When this re-assessment is made, I have no doubt the result will be of considerable benefit to the Exchequer.

AGRICULTURAL BURDENS.

I will now deal with a subject which is connected with agricultural burdens. The Committee will, no doubt, remember that this subject raised considerable
Debate in this House last year. There were revealed very startling figures showing how occupiers of land had been hit by the burdensome character of the taxation which had been levied upon them. I promised to look into the matter—I, obviously, was unable to deal with it at the time—and I have done so with great care in the course of the year. I have made very full investigations, have seen very many representatives of the landowning and agricultural industry, and everything that was said in the House has been more than confirmed by the results of these investigations. I have accordingly come to certain conclusions. But I should like to say this at once. There is no suggestion that anything in the shape of an indirect subsidy is to be given to the agricultural industry by anything that I propose in connection with this matter. My whole desire has been to put the agricultural industry on the same footing as the other industries in this country in considering the proper burdens which they ought to bear.

I can explain, perhaps, in a sentence the source from which the difficulties arise. The profits of the occupiers of land have been assessed in this country upon an assumption of their maintaining a certain ratio to the value of the land which they occupy. It is perfectly obvious that that ratio varies with the circumstances. Before the War, it was assumed that the people occupying land should be assessed upon the basis of one-third of the annual value. That was so whether you were an occupier who did not till the land, or whether you were a farmer who occupied it for tilling. During the War, profits on land, as everyone knows, rose very considerably, and, accordingly, the basis of assessment was raised. Now, of course, the profits have decreased very greatly, in some cases disappearing altogether, and it is necessary to reconsider the basis of assessment which was arrived at during the War. During the War, in the case of farmers tilling their farms, the basis of assessment was raised, at first to the annual value, and then to twice the annual value. That was perfectly right at the time it was done, but it no longer represents the facts, and, accordingly, after all the investigations I have been able to make, I am going to propose to the Committee that we should reduce the basis of assessment in the case of the
farmer from twice the annual value to the annual value, which, I am sure, is as much as it should be assessed at at the present time. In the case of land which is not being agriculturally dealt with, where there is no profit, and very often only expenditure—in those cases I propose that we should go back to the pre-War rate of assessment, that is, one-third of the annual value. These proposals will, I estimate, in the case of what are called amenity lands, mean a loss to the Exchequer of£150,000 in the present year, and£300,000 in a full year; in the case of agricultural land, a loss of£950,000 this year, and£2,150,000 in a full year.

OTHER ALTERATIONS RELATING TO PROPERTY.

I propose also to bring into force, concurrently with the re-assessment to which I have referred, that is, in 1923–24, certain provisions with regard to the allowances to be made in respect of the cost of repair and maintenance of property. That is a matter in which my hon. Friend the Member for Bridgeton (Mr. MacCallum Scott) took a great interest. He raised it, I remember, very persistently in the Debate last year, and, I thought, made a good case for the property owners, especially the small property owners. I shall submit proposals for increasing the normal flat rate repair allowance in the case of small houses and for enabling claims to be made for the actual cost of maintenance, not only in the cases now authorised, but in the case of all lands and houses of whatever value. I propose also to include in the Finance Bill a small Amendment of the law in regard to the assessment of woodlands, which, without causing any loss to the Exchequer, is represented to me as likely to be of convenience to the taxpayers concerned.

CHARITY LEGACIES.

I turn to the subject of charity legacies. Representations have been made to me, particularly by the hospitals, as to the position which has arisen out of the decision of the House of Lords in the case of Dr. Barnardo's Homes. In that case it was held that the charity could not claim exemption from Income Tax on the income from residuary estate, except as from the time when the residue was actually paid over. This is not a large
matter, but it has occasioned a considerable amount of hardship, and I propose to remedy the grievance.

EXCESS PROFITS DUTY.

Just a word with regard to the Excess Profits Duty. As I have explained to the House, there is a very large sum in arrear. I recognise one could do nothing but injury by being too exacting at the present time in the collection of the sums due in respect of that duty, and, accordingly, as I announced in December last year, I shall propose to the Committee an arrangement whereby the payment of the duty shall, in appropriate cases, be spread over five years from the 1st January last, and that, in the meantime, as from that date, interest shall be charged at the net rate of 5 per cent. per annum, without allowance for Income Tax, upon all Excess Profits Duty due for payment.

There is another matter which arises in connection with the Excess Profits Duty, upon which very urgent representations have been made to me, both by the Federation of British Industries and by the chambers of commerce. It arises out of a decision which is known as the Gittus Case, which has had the effect of creating great hardship where the personnel of a firm has changed. Where a firm first has realised profits and paid heavy Excess Profits Duty, and subsequently, after a change of personnel has taken pace, heavy losses have been incurred, this case laid down that it was impossible to put the subsequent losses against the previous duties paid. It would be very expensive indeed to attempt to meet all the cases which have been put before the Exchequer in this matter, but there is one class of case of great hardship with which I would propose to deal, and that is the kind of case in which the transfer is made of a business from a proprietor to his spouse or some lineal descendant. That kind of case does set up a very great grievance, and I propose merely to deal with that, if the Committee will allow me. That will cost, in all, a sum of£3,000,000, of which£2,000,000 will be incurred in the present year, and the remainder in the following year.

The alterations I have indicated in the Income Tax law, together with their re-action on the Super-tax, will cost for the full year 1922–23 a net amount of
£1,700,000, of which£700,000 will be effective by the 31st March next. These figures, of course, are explainable by the fact that, while some of the proposals involve a loss to the Exchequer, some will afford a slight gain. The concession in regard to changes of ownership for Excess Profits Duty purposes will, as I have said, cost the Exchequer in all£3,000,000, of which£2,000,000 will fall in the present year.

POSTAL RATES.

5.0 p.m.

I come to a subject which interests a much greater mass of people, and is of concern to that particular class of the commercial community whose success depends on getting down the cost of their manufactured goods The matter to which I refer is that of postal rates. Last year it was found that postal rates were not sufficient to make the revenue meet the expenditure without subsidy. The rates were increased. Certain promises were made at that time as to what might happen when it appeared that the happy position of a surplus was assured. These promises have received very exaggerated shape in the discussions which have taken place upon the matter, but I do not propose to go into that controversy now. I am convinced of the vital necessity of cheap communication for the commercial community and I propose to meet the claims that have been made to the fullest extent in my power. Accordingly I have agreed with the Postmaster-General to make the following changes.

First, Sunday collections (but not deliveries) to be restored. This will cost about£250,000.

Second, the postcard rate to revert to 1d. This will cost about£550,000 per annum.

Third, printed papers, subject to certain conditions as to hours of posting, to be reduced from 1d. to ½d. on packages not exceeding 1 oz., this costing about£1,500,000 per annum.

Fourth, the minimum charge for letters to be reduced from 2d. to 1½d., this costing£3,500,000 sterling.

Fifth, certain reductions to be made in telephone charges costing approximately£1,000,000.

The total cost of these concessions will amount to£6,550,000 on the revenue side
for a full year, and£250,000 on the expenditure side. It will not be possible to bring these changes into effect until the end of May. The cost for 1922–23 will be about£5,650,000. I wish hon. Members—because there is great confusion in the public mind between the figures of the commercial accounts of the Post Office and the cash accounts—to realise that the figures I give refer to the Post Office cash accounts. The cost against the Post Office commercial accounts—which are often quoted in public—is considerably greater. I hope and believe that these changes will ultimately bring increased revenue. If, unhappily, the result should be otherwise, and the revenue and expenditure do not balance in 1922–23 it must be understood that the charges will be increased again. We cannot have a subsidised service. We must be able to preserve the position on a commercial basis, this including the taxation which an ordinary business would pay.

SINKING FUND.

When I have given effect to these various concessions, I am left with an estimated surplus of£38,300,000. The Committee will remember I have not found anything for the redemption of debt out of the Revenue for the year. What are our obligations, statutory and contractual, in respect of debt redemption? There is, first of all, what is known as the New Sinking Fund which was set up by Sir Stafford Northcote in the year 1875, and which is in the nature of a general Sinking Fund not attached to any particular Government security. It amounted in 1921–22 to about£9,000,000 In the second place, there is the Depreciation Fund for Four and Five Per Cent. War Loan, and the amounts required for securities tendered for Death Duties and Excess Profits Duty. The sums required for these purposes we must provide to keep faith with the holders of the securities. Owing to the high price to which Government securities have risen, and in consequence of the small amount of securities tendered to us in payment of Death Duties and Excess Profits Duty, the sum needed for this purpose is not likely to be very large in 1922–23, and not more than between£10,000,000 and£15,000,000. In the third place, there are the specific sinking funds attached to the Victory Bonds, Funding Loan, and 3½ per cent. Conversion Loan amounting for
1922–3 to about£10,000,000. These sinking funds are again part of a binding contract with the holders under the prospectuses of the various issues—and the liability must, of course, be honoured. To meet these various obligations out of the Revenue for the year would be to reduce the dead weight burden of our debt by a figure of between£30,000,000 to£35,000,000, and would carry off practically all the surplus to which I have referred.

TRADE PEOSPECTS.

I have to address myself to another consideration. Unemployment is widespread. It is breaking the hearts and embittering the lives of hundreds of thousands of our workmen. The professional and middle classes are enduring privation today such as they have never before had to face. The unparalleled depression which beset us throughout the whole of the course of last year is still with us. Happily there are to-day hopeful signs of a revival which with a little encouragement might develop into solid progress. The burdens of taxation which have been borne by the British people both during and since the War in a degree that has excited the admiration of the whole world are now felt to be so oppressive as to check enterprise and deepen despondency. Is it essential that we should maintain this pressure? Is it not possible by slackening it to give some much needed stimulus to trade, thereby lessening our expenditure and next year at least, if not this, gain some revenue as the result of the augmented profits of revived industry? The policy of the redemption of debt we have pursued with vigour and success. We have provided£322,000,000 in cash for redemption of debt during the last two years. I have no doubt we were right in doing so. I have no doubt we benefited by it. It enhanced our credit, and it put back into the hands of industry considerable sums which were unprofitable in the hands of the State. Equally, I have no doubt as to the course which we ought to pursue at the present conjuncture in our affairs. We are saddled in the present year with a new burden in the shape of the interest that we have to pay on our debt to the United States of America. That we shall meet without question. It is possible by making too great exactions on the tax-
payer to defeat the very object at which you aim, no matter how praiseworthy it is. I am of opinion that we ought not to ask the taxpayer in this year to redeem Debt. I do not mean to say that he is not to find the revenue to meet the expenditure. That must be. All I say is that after the superhuman efforts of the last few years and in the very exceptional circumstances of the times, we shall offend against no sound canon of finance if we content ourselves in this year with raising the revenue which is necessary to meet our expenditure. What does that involve?

Sir W. JOYNSON-HICKS: it involves a fall in the rate of exchange.

Sir R. HORNE: I do not think that for a moment. But that can be debated afterwards. It involves in the first place the suspension of the sinking fund to which I have referred, and in the second place that we should, to meet our obligations towards the holders of securities who have the rights to which I have referred, re-borrow the money necessary for that purpose. I think the Committee understand clearly that that re-borrowing is for the purpose of paying special forms of debt, and does not in any way result in adding to the general burden of debt. At the end of the year our debt will not be decreased, but it will not be any greater. I am confident in the belief that the circumstances of to-day justify what I am proposing. The need, not merely the clamour, but the real need for a reduction in the burden of taxation is great, if Industry which now gives signs of restarting, is to have a fair prospect of success. I accordingly propose that in the present year we shall not budget for any reduction of debt out of revenue.

INCOME TAX (REDUCTION).

If that view be adopted it means that I shall be left with a surplus of£38,300,000 for the reduction of taxation. How ought it to be applied? I have not been without advice on this subject. I have received numerous deputations and innumerable letters and the Press have not been lacking in suggestions, but it is now a long time since I made up my mind as to what direction such a reduction should take. I hesitate to make that statement. I am very reluctant to disclose the fact that my mind has not been made up for me during the last few days
by letter writing, and petitions organised by active journalists. I do not wish to discourage these petitions because they help the revenues of the Post Office.

The Income Tax is the tax which bears our heaviest burden, and it is the one which most affects trade. I remember years ago, before I was a Member of this House, reading a speech by the right hon. Member for Paisley (Mr. Asquith)—I think he was Chancellor of the Exchequer at the time—in which he descanted upon the evils of a high Income Tax in relation to commerce and industry, and everything that he said then has been emphasised and confirmed by our recent experiences. I have received numerous deputations of commercial men who have assured me that the best way to help trade and commerce to-day is to bring about some mitigation of the burden of the Income Tax. Accordingly I propose to reduce the Income Tax by 1s. in the pound. The cost to the Exchequer for the full year will be£52,000,000, but as the Committee knows the tax is collected by instalments and there are always arrears, so that I estimate that the actual cost in the coming year will be£32,500,000. The change will, of course, run as from the 6th April.

TEA DUTY (REDUCTION).

I now have left out of my surplus something under£6,000,000. What can I usefully do with it? Although I do not attach great importance, from the point of view of ultimate incidence, to the time-honoured distinction between direct and indirect taxation, I nevertheless think, especially looking to the cost of living at the present time, that I ought to make some decrease in indirect taxation, if I can, at the same time as I make this reduction in the Income Tax. Therefore I propose to reduce the duty on tea by 4d. 1b., that is to say, from 1s. to 8d. per 1b. The duty of 8d. will only be paid by foreign tea, because there is a preference in respect of tea grown in India and Ceylon and any other tea produced within the Empire, and after all 90 per cent. of the tea consumed comes from within our Empire. The duty upon Empire tea will be less that 8d. by one-sixth, and will amount to 6⅔d. If anybody wonders about the fraction, from the information I get from experts who advise me, that will create no trouble,
because the duty is never paid upon a single pound. Somebody may also ask, Will the full extent of this remission of duty reach the consumer? I am told that the competition in the tea trade to-day is such that there is no doubt with regard to that. This was a matter upon which I desired to be assured, and I am informed that this undoubtedly is so. Those who know the trade from the inside will confirm what I have stated. It appears that the remission of the duty will be felt even down to the consumers who buy their tea in pennyworths.

The remission of the duty on tea involves a reduction also of one-third of the duties on coffee, cocoa, and chicory, which are all linked up with the duty on tea. In order that the merchants who have stocks upon which the duty has already been paid may get rid of their duty-paid stock, it is proposed that the reductions on tea, cocoa, coffee and chicory should take effect on 15th May, except in the case of imported cocoa preparations, for which the date will be the 1st July. The reduction of the Tea Duty and its consequences are estimated to cost£5,500,000 for a full year and£5,000,000 in the present year.

BALANCE SHEET, 1922–23.

Accordingly the ultimate balance sheet for 1922–23 on the basis of my proposals will now be:


Revenue
…
£910,775,000


Expenditure
…
£910,069,000


Leaving a balance of
…
£706,000

In considering this balance, I beg the Committee to remember that I have already provided£25,000,000 on the expenditure side for contingencies.

This, then, is the Budget which I present to the Committee for acceptance, and I claim for it this merit, that in a very trying, anxious and critical time for the commerce and industry of this country, it provides within the limits of legitimate and prudent finance as much relief from the burden of taxation as is possible, and in a form in which it is thought will be most efficacious. It is in the belief that it will do something to create new hope and fresh enterprise throughout the vast organisation by which the nation's business is done, and upon which the prosperity of our finances depends, that I venture to commend it to the Committee.

CUSTOMS AND EXCISE.

1. TEA.

Motion made, and Question proposed,
That in lieu of the Customs Duty now payable on tea, there shall, on and after the fifteenth day of May, nineteen hundred and twenty-two, until the first day of August, nineteen hundred and twenty-three, be charged the following duty, that is to say: —
Tea - - the lb.- - eight pence.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Mr. ASQUITH: It is not customary on the first night of the Budget to enter into any detailed examination of the proposals of the Chancellor of the Exchequer, and I think that is a good and a wise custom. It is necessary that we should be able to sleep over them before expressing an opinion I am only going to make two or three observations of a perfectly general character. First of all, let me congratulate my right hon. Friend not only upon the lucidity but on the terseness of his statement. I have heard a great many Budgets introduced into this House, and I plead guilty to having introduced two or three myself. But I have observed that very few Chancellors of the Exchequer are able to resist the temptations presented by a somewhat scenic occasion, and they have been in the habit of taking the opportunity to indulge in a general discourse de omnibus rebus and sometimes de quibusdan aliis, which often suggested to their hearers the interpolation of flashes of more or less extemporaneous humour with a reflection of the midnight oil. My right hon. Friend has avoided that temptation and, I think, has set a very good precedent, because he has shown, at any rate in the matter of rhetoric, whatever may be the case with his practice, the inbred and ineradicable frugality of his native country.
I will only say in regard to the review which he gave us, a very interesting and in many ways an encouraging review, compared with the forecast which was legitimately made twelve months ago, of the experience of the past financial year, that the Government has been indebted curiously enough for the progress made during the year—a progress which I welcome heartily both as regards the floating and the dead weight debt—that
the progress it has made in reducing the national liabilities is due very largely to the depression of trade. Because trade has been so slack, because other avenues and channels of employment have been so blocked, or so sterile, we have seen this rise, predicted so far as I know by no financial experts a year ago, not even the great bankers to whom the right hon. Gentleman has referred, this great appreciation of Government securities, a reduction of the bank rate and so on, which has enabled the Treasury to pay off, I think, something like, up to this date,£300,000,000 of the Floating Debt, which I always regard as a great incubus. What is the situation as put before us by the Chancellor of the Exchequer? He proposes to remit taxation—1s. off the Income Tax, 4d. off tea, both very desirable things in themselves. But out of what is he going to do it? He has not got a surplus. Anybody who listened to his speech knows that, and no one knows it better than he himself. The£38,000,000 figure which he mentioned is earmarked for reduction of debt. There is the New Sinking Fund, and there are, as he himself properly admitted, contractual obligations in the way of redemption to be fulfilled to those who have lent money to the State. He makes up his surplus—the surplus out of which the remissions of taxation are to take place—by borrowing. I am not going to-night into any of the details.
I want to put to the Committee two general propositions which have often been emphasised by Chancellors of Exchequer and by critics of Chancellors of Exchequer, which are so obviously true that they have become part of the commonplaces of finance, and which were never more appropriate and never more worthy of being taken into account than they are in our existing situation. What are those propositions? The first is that the only legitimate ground for the remission of taxation, however heavy and burdensome and oppressive—I believe our present taxation deserves all those epithets, both direct and indirect—is a corresponding excess of estimated revenue over estimated expenditure. You have no business, and no Chancellor of the Exchequer has a right, to remit taxation out of a surplus artificially produced. There are various expedients resorted to from time to time, and they have been resorted to to-day, by which you can create an apparent and fictitious surplus.
One is by borrowing, which is the course the right hon. Gentleman proposes. Another course is by over-estimating your revenue, and that is fortunately an impossible expedient under existing conditions. The third is by under-estimating your expenditure. He arrives at his figure of£38,000,000 only by making an estimate of the supplementary expenditure for the present year of£25,000,000. What were the supplementary Estimates of the financial year just closed?£97,000,000, I think. If my memory serves me, I think we started the financial year with an estimate of something like£30,000,000 for supplementary expenditure.

Sir R. HORNE: It was quite clearly stated in the Budget speech that out of£177,000,000 surplus only£80,000,000 would be available for the reduction of debt, and the other£97,000,000 at least would be required for the ordinary expenditure of the year.

Mr. ASQUITH: That is quite a different point. When the Estimates were presented—the Estimates of the different Departments—could anybody have been led to suppose that those Estimates would be exceeded by£97,000,000? Of course not, and everybody knows it, and from a rather long experience very much emphasised and exacerbated by the present Government, I shall be more than surprised if the£25,000,000 put down here as a contingent Supplementary Estimate is not exceeded by one half or, perhaps, doubled. What then becomes of your£38,000,000? It does not exist. It is wiped out at once, if you can imagine an increase on the Supplementary Estimates in anything like the same proportion as has taken place during the last three years. My right hon. Friend (Sir D. Maclean) reminds me that the Supplementary Estimates during the last three financial years have exceeded£300,000,000, an average of£100,000,000 a year, yet the Chancellor of the Exchequer puts down£25,000,000. He is going to give the House of Commons an opportunity of making a great gamble—that is what it amounts to—upon which this estimated reduction of taxation is going to take place.
I wish to make another general observation—and here I am glad to think, from something which fell from the Chancellor of the Exchequer, that he really in his
inner consciousness is in total agreement with me. It is the greatest mistake you can make; there can be none greater or more fatal, in the abnormal conditions under which we now live; to take a short view of finance. The Chancellor of the Exchequer must extend his vision beyond the 31st March of the current financial year—or, of course, such contingencies as a General Election. He must take a long view. Nothing is more important at this moment, when you are arranging the finances of the present year, than to put yourself in the position of the Chancellor of the Exchequer—I do not know who will occupy that post—this time next year. It may be it will be my right hon. Friend himself, in which case he will have to bear the burden which he himself has created. It may be that some unfortunate successor will have vicariously to carry that burden. You must put yourself in the position of the Chancellor of the Exchequer, who has got to Budget for the year 1923–24, and look at it from the point of view both of revenue and expenditure. Take revenue. It is quite clear that he cannot possibly anticipate any such revenue as my right hon. Friend is forecasting for the present financial year, and that for two very simple reasons—there are many other reasons, but two for the moment are sufficient. In the first place, take the item of Income Tax. You cannot possibly gather in anything like the sum that year as you will in this. The Income Tax is still the most productive single item in your source of revenue. We all know that he will be receiving his Income Tax on an assessment based on three bad years. The right hon. Gentleman has got a reasonably good year among the three years on which the present Estimate is based. The Chancellor of the Exchequer next year will have three bad years, and the produce of the Income Tax must necessarily be very substantially lower than the most sanguine can expect for the next 12 months.
There is another and equally obvious reason. You are coming to the end, you will then have practically come to the end of a source from which you have been drawing since the Armistice—the sale of War assets. I have always protested against that being included as part of the revenue of the year. About£700,000,000 has been received for the sale of these assets, purchased mostly
with borrowed money—during these three years, and it has been treated every year as part of the revenue of the country, and has gone to help the Chancellor of the Exchequer's balance sheet. We have got to the end of that now—not quite the end perhaps. A figure was estimated for this year of£90,000,000.

Sir R. HORNE: The£90,000,000 included a great many other things.

Mr. ASQUITH: And the Chancellor of the Exchequer next year will have the bare remnant of this nearly exhausted fund. There again his revenue will be seriously depleted. So much for the revenue side of the account. Now look at the expenditure. The Chancellor of the Exchequer of that year will have to pay, in order to meet the interest on our obligations to the United States, not£25,000,000, but£50,000,000, so that he will be£25,000,000 on the wrong side of the account as regards expenditure. If you look forward as you ought to in budgeting not merely for 12 months, but for 24 months, all these things have to be taken into account, and your remissions of taxation this year, your diminished prospective income, and your necessarily enhanced expenditure, he will be a very clever man who is able without further borrowing to make both ends meet. I put these considerations before the Committee. They belong to the region of commonplaces. There is not one of them that is disputable in reason or fact, and I ask the Committee before we come to the detailed considerations of the proposals now put before us by the Chancellor of the Exchequer to take, not a hasty precipitate provisional view of what is popular or unpopular in the present year, but to take a large and far-sighted view of the financial position of the country, and to pause, and more than pause, before they assent to them.

Mr. CLYNES: I think that this is the first occasion on which my right hon. Friend has presented a Budget statement to the House of Commons, and, accordingly, I should like to add my own word to the congratulations which have been expressed with regard to the lucidity of the Chancellor of the Exchequer's statement. I do not recall any statement of Parliamentary importance given to us
with greater clearness. Indeed, the right hon. Gentleman, without forfeiting any of the traditional force of Parliamentary oratory, was able to present the statement in such businesslike terms as almost naturally as evoke from us all a wish that this plan and method of presenting a complicated financial statement to us might be followed in future years. I congratulate the right hon. Gentleman, also, upon his cheerfulness and buoyancy in his struggle to convince us that the future will make it possible for him safely to remit the taxes the remission of which he has announced; but I recall quite recent statements of a very different character which were made by him when dealing in this Chamber quite recently with other subjects. It is all very well to congratulate the general body of taxpayers in this country upon their patriotism and the readiness with which they have responded to the national call. It is all very well to congratulate the country generally upon its financial stability. The fact, however, is that it was because of a great and increasing fear that we could not pay our way that only recently the Government created what we know as the Geddes Committee, in order that expenditure should be substantially reduced, whatever the consequences were to those who might have to suffer.
Some of my hon. Friends on this side of the House only a few weeks ago—as recently as 4th April—submitted to the House a Motion proposing that old age pensioners ought not to be penalised with respect to the receipt of their State pensions for the reason that they receive some of their small weekly income as a result of their past thrift, or because of investment by way of weekly contributions in friendly societies, trade unions, or other similar organisations. That proposal, had it been carried, would have cost the country some few millions of pounds, but it would have brought into many a poor home some degree of that cheerfulness which is now absent in their case, but which, apparently, is possessed by the wealthier sections of the community. The Chancellor of the Exchequer, in opposing that Resolution, made this statement, and I invite the attention of the Committee to it. I also invite them to compare it with the general tone and terms of the statement to which we have listened
this afternoon. The Chancellor of the Exchequer said:
The year 1923–24 is going to confront us with far more serious financial problems than even the year 1922–23. The revenue to be obtained from Income Tax then will have two bad years in the three upon which the average will be based instead of one. Miscellaneous receipts, so far as they are of a special kind, we may anticipate will have disappeared altogether, and instead of£25,000,000 interest on our debt to the United States we shall have to find£50,000,000.—[OFFICIAL REPORT, 4th April, 1922; cols. 2172 and 2173, Vol.152.]
It would appear that, when an argument is necessary for the purpose of resisting an appeal from this side on behalf of the most needy sections of the community, terms of such gloom and difficulty as those which I have read can be used, but when it is a question of remitting taxation in the case of many who are still able easily to bear the burden, a very different argument can be found. I could not listen to the concession which the right hon. Gentleman announced in the case of the farmers and of certain landowners in this country without being reminded of the Government's policy quite recently in relation to farm workers, for such law as existed to guarantee them something like a living wage was brought to an end, and large numbers of them have been thrown back to a condition which, I am assured, places them on no better than a pre-War level of subsistence. I think that, in view of that recent Governmental action, the right hon. Gentleman might very well have stayed his hand with respect at this moment to any substantial financial concession to the farmer class.
I share the right hon. Gentleman's feelings with respect to the great national difficulties resulting from unemployment, and I refer to the matter in order just to draw his attention to what, apparently, the Government and the country are going to witness to-morrow. To-morrow night there expire the notices given to some hundreds of thousands of workmen who have asked for no change, who are pressing no demands, who are seeking no alteration of any kind in their terms of service or in their relationship to their employers, but who are to be locked out by the order of the employers, for the reason that they do not agree always to allow employers to decide for themselves what a material change may be when it is
necessary to institute material changes in ordinary workshop working conditions. I ask the right hon. Gentleman to reflect upon the probable consequences of this lock-out, in view of the picture which he drew of the consequences which followed in the spring and summer of last year through the prolonged stoppage in the coal industry at that time. I cannot properly pursue the theme further, but I do suggest that, if any steps can be taken by those who may have power to prevent these industrial calamities, that power should be used; and I ask them, further, to remember, when dilating upon the consequences of industrial troubles in recent years, that in no one of those great troubles in recent years have the workmen been the aggressors, but that in all of them the workmen have been resisting some attack made upon their conditions of work or their rates of wages by employers.
I think the Committee has already heard quite a sufficient statement from my right hon. Friend who has just sat down, as to the risks which the Chancellor of the Exchequer is running by pursuing the lines announced in his Budget statement. I do not know whether the terms of his statement have been dictated by national necessity or by political strategy. An election Budget can be framed by remission of taxation this year, but with the certainty of a considerable deficit next year, and consequent alarm in trade circles, and consequent further business dislocation and, perhaps, other new taxes. It is for the right hon. Gentleman, who has the authority for the moment, to say which is the far-sighted view to take. The short-sighted view has often been taken in the House of Commons, in spite of repeated appeals on questions of finance from those who represent Labour opinion. Labour opinion foretold the end of the disastrous financial policy which Governments of recent years have insisted upon following. If Labour opinion on national finance had been followed, much more of our War debt would have been paid from current revenue. The right hon. Gentleman will have the opportunity, and I am sure he will take it. I repeat that, if Labour opinion had been listened to, and Labour plans accepted on questions of national finance, this country would have a far smaller burden of War debt than it has to-day, much more of our War expenses
would have been paid out of current revenue, and War fortunes would have been prevented, or wealth which was improperly made during the years of the War would have been appropriated for national use, just as life during the War was demanded for national safety.
The debt inevitably incurred as a result of the War must eventually be redeemed, not by heavy taxation spread over a period of half a century, but it must be liquidated by a graduated levy upon accumulated wealth. In the meantime, we must ask ourselves what are the relative claims which may fittingly be presented in so far as any surplus, imaginary or real, may have to be handled by the Chancellor of the Exchequer? Who has the first claim to relief of taxation? I congratulate the right hon. Gentleman upon having remitted as much as 4d. of the tea duty. I consider it far better to have done that than to have remitted any lesser sum, which scarcely would have given to the poorer payers of the duty any certainty of actual advantage in their small weekly purchases. Next to food would come the case of those who have strong claims to abatement or to exemption altogether from Income Tax, because their incomes have remained low in spite of the high cost of living in recent years. They are a considerable and an extremely serviceable class. They are clerical workers very largely; they are not of the ordinary manual classes; but, while rendering extremely useful services, a large number of this class of the community have had to bear the very heavy and increasing cost of living and very heavy taxation, without anything in the way of a corresponding addition to their salaries or their ordinary weekly earnings.
6.0 p.m.
Taxes on food, tobacco, entertainments and beer form a formidable item in the weekly expenditure of an ordinary British householder. A family of five, it may be fairly estimated, pays not less than 14s. per week in relation to these items alone. Such a sum, applying as it does to millions of workers who have suffered extremely heavy wage reductions in the last 15 months, is felt as a very heavy burden, far more oppressive, far more irksome, than the burden borne by any of us who may complain of the rate of our Income Tax. If the tobacco duties, for instance, were
reduced by a half, and if, in addition, all food taxes were abolished, the loss to the revenue would be far less than a quarter of the sum now paid in War Loan interest. Direct taxation of trade in the form of Corporation Tax and Excess Profit Duty since the end of the War has, of course, secured substantial revenue but much of it has been secured at the expense of serious handicap to business, without treating equitably the trade enterprises which have been subject to those taxes. On the whole, I think experience has shown that if business is to be encouraged, if adventure and enterprise are not to be restrained, business as such should be less subject to taxation. Taxes should be imposed more and more upon the individual and less upon the occupation. Trade and business enterprise should not be taxed so far as they have been, but profits, when they are revealed and when they are actually paid to the receiver, should be appropriately taxed as part of the total income of the taxpayer.
Let me revert to this burden of our War Loan interest. It is not too much to describe it as the most crushing of our burdens. About 82 per cent. of our present revenue is being spent, partly in interest, as payment upon past War debts, or in meeting present expenditure for the Air Force and the Army and Navy of today. There is presented to statesmen a big subject of policy, for until we can more and more reduce the outlet in this direction Chancellors will be troubled every year with the task of trying to find revenue from distracted taxpayers and from people who feel the oppressiveness of the burdens of these duties resting today upon our food. The annual interest on War Loan is nearly as much as the whole of the revenue from the heavy Income Tax of recent years. Indeed, so oppressive has it become that one might well say that this Debt, remaining nearly at the same figure year by year, stands out as almost our chief national possession.

Mr. MARRIOTT: Are we to infer from that that the right hon. Gentleman would reduce compulsorily the interest on the Debt—would repudiate a portion of it?

Mr. CLYNES: Certainly not. No such inference must be drawn from the observations which I am making, though there may be occasion for dealing with the
question of alternatives as to how the revenue can be raised so as to diminish the weight of the Debt. I think it is advisable to pursue this matter a little because the burden is so universally felt, and because it is the heaviest item in the charge for which every year we are trying to raise money. This War Loan represents a debt per head of the population of about£160, and the annual interest on the debt is equal to a charge of about£7 per person. The process of raising money by Income Tax and the payment of War Loan interest is largely a process of transferring to the same men, to a very great extent, in the form of interest what is raised in the form of taxation. Most of the interest on the War Loan is paid unquestionably to the wealthier classes. A very large number of poorer people responded, within their humbler means, and invested their money, but the War Savings Certificates, being the form held chiefly by the poorer classes, amount, I understand, to a total of only round about£300,000,000 out of a total holding of more than£7,000,000,000. I think the figures, and any reasonable deduction from such evidence as is available, clearly prove that, after all, no very great amount of the interest goes to the humbler classes. In short, I believe Chancellors eventually will be driven to the expedient, which has been suggested by Labour, to raise a large sum of money for the redemption of this debt and, consequently, for a substantial reduction in the annual payment of the interest. If you shrink from a levy upon capital— [An HON. MEMBER: "We have it now!"] —I know it is borne now in another form, but the plan of Labour would put a more speedy end to the heavy taxation which annual incomes now carry and, therefore, give far greater relief to those who complain of the charges which Chancellors have imposed upon them in recent years. In fact, it was to be observed that the heartiest of the cheers which the Chancellor's statement evoked was given when he announced the remission of 1s. upon the Income Tax. Members of the House individually felt some sense of gratitude to the Chancellor and responded in quite a natural manner.
While people resent the plan which we suggest and declare that it would be a heavy tax upon capital, they tolerate with complacency the levy upon national energy imposed by landlords and
property owners. This levy is in the form of excessive rent and high charges exacted from industry and from business for the use of space in which to carry on the industries of the nation. The right hon. Gentleman referred for a minor purpose to the Entertainment Tax. That is a lesser interference with the interests of the entertainment world than the enormous rents demanded for the use of land and premises for theatres, concert halls and cinemas. The wonder is that the business mind has not attacked more directly and more really the interference with business by those who can exact these heavy levies and charges merely for the premises to carry on the ordinary activities of the nation. Probably at some later date the real business man will come to this House—not the man who outside on the platform pretends to be a business man and when he gets here is absolutely mute or, if he says anything at all, finds that from the business standpoint the Government takes not the slightest notice of him. I fear that when 12 months later we are able to review the experience of the Budget statement we have had his afternoon, the Chancellor of that day will find that few, if any, of the anticipations of the present Chancellor of the Exchequer have been realised.

Sir SAMUEL ROBERTS: I am sure that whatever may be our opinion of the Budget which has been disclosed to us the Committee on all sides will sympathise with my right hon. Friend that it has fallen to his lot to bring forward his first Budget under the most depressing circumstances. Last year he was not able to do it, and the Leader of the House undertook the duty for him. To-day we have had two speeches from the other side of the Table. The only two suggestions made by the right hon. Gentleman the Member for Paisley (Mr. Asquith) were, first, that there was no surplus to dispose of and, secondly, that the receipts for materials ought not to have been taken into account. Receipts of that character always have been taken into account as a general rule. Generally, in my view, my right hon. Friend has done the best he could under the circumstances. The right hon. Gentleman the Member for Platting (Mr. Clynes) objected to the measure of relief which the Income Tax payers are to get, but they ought to get it when the Committee remembers that
nearly one-half of the tax revenue is paid by the Income Tax payer. He has borne the heat and burden of the day all through the War, and it is not only the Income Tax payer himself, but all the workpeople and all the business of the country. That is why so many of us rejoice that this is being done. Coming to the Budget itself, the tax revenue was less than the Estimate by£107,000,000. There are three disappointing items. Excess Profits Duty was£89,000,000 below the Estimate, Income Tax was£11,500,000 below the Estimate, and the Corporation Profits Tax was£12,500,000 below the Estimate. There are two satisfactory items on the other side, namely, that the Supply Services cost nearly£69,000,000less than the Estimate, and the service of the debt is£12,700,000 less. One cannot help turning back to the Budget of two years ago when the trade of the country was exceedingly prosperous, people were making profits in all directions, and there was no unemployment at all. I was looking at the trade union unemployment percentages, and when the Budget was introduced in 1920 unemployment was less than one, it was 9. During that year the percentage kept very low indeed. It got to 6 per cent, in December, then when the year turned it got up to 6.9, in February,1921,it was 8.5, in March 10, and then came my right hon. Friend's Budget in April, when it went up to 17.6, excluding the coal strike. During last year it kept in the neighbourhood of 17. The right hon. Gentleman in that Budget budgeted to pay off£234,000,000 of debt, which he was able to do during that year. He stated quite correctly that that was on a 3 per cent, basis, that is, 3 per cent. of the total debt. He estimated that in a full year£198,000,000 would be received on account of the extra taxation which he was putting on.
When the Budget was introduced last year the Government saw that this year they were going to be in a difficulty unless great economies were effected, and the Treasury circulated a document to all Departments asking them to reduce for 1922–23 by 20 per cent. the Estimates of£603,000,000 in 1921–22 for Ordinary Supply Services. The Departments were not able to do that, but they volunteered a reduction of£75,000,000 instead of the reduction of£120,000,000 which was
demanded. The Treasury were not satisfied. Therefore the Geddes Committee was set up, with instructions to make a cut of£175,000,000, including the£75,000,000 cut which had been volunteered. This they proceeded to do. We know the result. They recommended reductions amounting to£86,000,000 directly, but the Government could only make cuts of£64,000,000. In this respect I would draw attention to a paragraph in the first Report of the Geddes Committee. This is a very important matter, because it is a guide for the future. In dealing with£75,000,000 cut which the Departments had volunteered, the Report says:
In many cases, the reductions proposed by the Departments are automatic, due to the fall of prices and wages, or to windfalls, or to the cessation of special expenditure on services arising out of the War. The reductions in Estimates shown in response to your circular are therefore by no means fully the result of curtailment of activity, or of economical administration, and this point cannot be too clearly brought out.
The point I want to make is that in some way or other a Geddes Committee or some advisory committee of the Treasury ought to continue. I am quite sure that that is the opinion of most hon. Members. The Treasury could not get out of the Departments what they wanted, and the Geddes Committee had to be appointed. Is it not a lesson for us for the future, that the Chancellor of the Exchequer must in some way or other bring some such influence to bear upon the Departments, and that they will have to economise? I do not know what the exact form ought to be, but I would suggest that the Treasury appoint a committee of expert gentlemen like the Geddes Committee to advise them as to what rations are to be dealt out to the various Departments. If taxation is to be brought lower than it has been made to-day that is the only way to do it.
The Chancellor of the Exchequer regrets that the Income Tax is so high. It is paid either in whole or in part by 5,000,000 of people. There are 2,400,000 actually paying Income Tax, and there are 2,600,000 people whose incomes are covered by personal allowances, deductions, and reliefs from Income Tax. Therefore there are 5,000,000 of people who are being relieved by the reduction of Income Tax announced to-day. The amount of tax revenue last year was£856,000,000, nearly half of which was contributed in Income Tax. It is esti-
mated that the total income of the country last year amounted to£2,700,000,000, and as the tax revenue was£856,000,000, it means that the country was being taxed to the extent of nearly one-third of its total income by the Government. That is a burden which cannot go on, and some further reduction must be made.
We cannot be satisfied with the taxation of the country as it is at the present time. I tried by a question a short time ago to get to know from the Chancellor of the Exchequer the taxation per head, reduced to the pound denominator, in this country and in other countries in Europe. He could not give me the exact figures because of the exchange. But 12 months ago I did get the returns, and I do not think the figures have altered very much. The figures which I got last year showed that we were far and away the heaviest taxed country. Reducing the taxation per head to American dollars, Great Britain stood at the top with taxation of 87 dollars per head. The United States came next with 56, France 34, Belgium 15, Germany 12, and Italy was at the bottom of the list with 5 dollars. Therefore the Committee will see that the taxation per head in this country is nearly as much as the taxation per head in the United States and France put together. The Treasury circular which was sent out to the Departments said:
What is required in order to maintain and stimulate industry and commerce and secure full and regular employment in the country is a reduction of taxation and of the burden of the State's indebtedness as rapidly as possible, a process which can only be achieved by n continuous reduction of expenditure throughout the next few years.
The only way to do that is by reducing our commitments Something has been said, and the newspapers have commented upon it, about a proposal to equalise the payment of pensions between taxpayers of the present generation and posterity. That is said to be unsound finance, but I do not think it is unsound finance. It is a matter of equity between the present taxpayers and those who are going to follow. The present taxpayer is paying the full amount because the pensioners are living. Every year that passes the amount will get less, because the pensioners will die. My proposal is that the amount should be equalised so that the taxpayers who come immediately after us should pay the same amount, either
for the whole period of the pension for, say, 30 years or more, or for a certain period, 10 years or so.
There is another question of importance, and that is the international Allied debt. On 31st December, 1921, there was owing to the United States of America, exclusive of interest, the equivalent of£2,292,000,000. The Chancellor of the Exchequer told us to-day that£947,000,000 were owing by Great Britain to America. On the other hand, we are owed by our Allies£1,807,000,000, so that if they pay us we have a balance of£860,000,000 in our favour. A proposal has been made for all-round cancellation of these debts. If there is all-round cancellation we should lose£1,017,000,000, but if we have to pay the United States what we owe them, namely,£947,000,000, and if we have to let off or not collect what our Allies and our own Dominions owe to us we should incur a total burden of£2,911,000,000. That is much too big a thing. It could not be done. The United States are promoting an Allies Debt Refunding Bill, which means that they intend to collect the debts due to them and not to pay attention to the suggestions for cancellation. In my view these moneys were all advanced for one purpose, to win the War, and it is only a matter of equity that the various countries who have lent the money or received the money should meet and try to come to some agreement as to repayment over a long period at a low rate of interest. None of the countries, including ourselves, could pay now. Under the Monroe doctrine, which was established by the United States many years ago, the United States will not permit any European country to take a footing in either North or South America. It strikes me as if there were a kind of extension of the Monroe doctrine in this matter, that while they will not allow any European country to go to America they will not take any part in the affairs of Europe. It is a sad state of things if America has come to any such conclusion as that it will not take any responsibility for the purpose of preserving the peace of Europe or arranging peace in Europe. I believe that an urgent message to that effect has been sent from Genoa to America, but so far without any result. On the whole I think that the Chancellor has done the best he could. He has
eased the taxpayer in an equitable manner, and I believe that the Budget will be received on the whole as the best that is possible in the circumstances of the moment.

Sir F. BANBURY: I congratulate the Chancellor of the Exchequer on having made one of the clearest and most interesting speeches which have ever been made during the course of the 30 years in which I have heard Budget speeches delivered. For the whole of an hour and a half he kept the interest of the Committee, and his speech was devoted to the subject which was before us, and, as the right hon. Gentleman opposite said, he did not go to extraneous matters. When I come to the Budget itself, I also think that the right hon. Gentleman has done the best he could in the circumstances, but whether the circumstances ought not to have been different is another matter. As I understand it,£90,000,000 of the revenue comes from special sources. I could not catch what those special sources were, but I understood them to be derived from the sale of certain stores, and matters of that sort. If that is so, the£90,000,000 being, as the right hon. Gentleman has said, the result of purchases made with borrowed money, there is no question that that money ought to go in redemption of debt, and not be treated as revenue. If that be so, then the situation is very much worse than it would appear to be on the statement made by the Chancellor of the Exchequer because, instead of having a surplus of£38,000,000, he will practically have a deficit of something like£50,000,000
I have done the best I could in my humble way during the last four or five years to secure the reduction of the very heavy burden of taxation, not by means such as were outlined by the Leader of the Labour party, such as the capital levy or vagaries of that kind, which would not only not relieve the situation but would render it far worse, but by the only way in which the situation can be relieved, and that is by the reduction of expenditure. There can be no doubt that it is impossible for the country to go on bearing the enormous burden which has been put upon it by Income Tax, Super-tax and Death Duties. The Death Duties themselves, which I think amount to
£50,000,000, are open to the same objection as using for revenue the money derived from the sale of surplus stores. They are capital. In taking them you are taking away from the capital of the country and using that capital to defray your annual expenditure. The Death Duties, Super-tax and Income Tax, take something like 12s. or 13s. out of every 20s. which a very large number of people in this country receive. That cannot go on. If we wish to avoid unemployment savings must be made in order that business can be carried on.
The American Ambassador, in 1914, I think, in a very interesting letter which he wrote to some friends or relations of his in America, giving his impressions of England, said that England was not so very much superior to the United States in its methods of carrying on manufactures or industry, but that it had this advantage, that it had the savings of two or three hundreds years which America had not got, and that when in the course of time America could have that advantage and those savings, he would look forward to America outdoing this country in every branch of trade or industry. The American Ambassador was right. It is essential, not that there should not be rich men in the country, as some of the Labour people seem to think, but that there should be more rich men in the country. The more rich men you have, the more people employed the country will have. Therefore, in criticising the relief which the Chancellor is going to make, and which no one appreciates more than I do, I wish to emphasise the necessity of reducing our expenditure. But the Chancellor of the Exchequer is going to do what I think is often done in private life. Say that a man has an income of£1,000 a year, and he spends£1,000 a year, and that then his income is reduced to£950. He does not save the£50, but he goes to a bank, or sometimes less creditable people, and borrows£50 in order that he may make both ends meet. That is what the Chancellor of the Exchequer is going to do. [HON. MEMBERS: "No!"] He is going to borrow£25,000,000 in order to make the reduction—not the whole of the reductions but a great part, probably about three-quarters—which he proposes I do not allude to the suspension of what is called the new Sinking Fund, which amounts, I understand, to about£9,000,000, but to£25,000,000 of our con-
tractual obligations, which he is bound to meet, and in order to meet these obligations he is going to borrow money.
I think that that is the beginning of a very bad course. I doubt whether this was done even in the times of the Peninsula War, but I am not certain, as I did not look it up. I did not expect that any Government in these days would borrow money to meet contractual obligations. I can understand the suspension of the new Sinking Fund. I do not think that that has been done for a considerable number of years, but it has been reduced, and I remember the present Prime Minister reducing it some few years before the War. But I do not attach so much importance to that— though, with a debt of£7,500,000,000, I think that we ought to take steps to reduce it—as I do to borrowing money to meet contractual obligations. And there is further danger in what the Chancellor is about to do. It is such a very easy thing. You satisfy public opinion, and you reduce a burden which is a grievous burden and which ought to be reduced, but everyone knows that once you begin to go down hill your pace tends to hasten, and I am afraid next year, when it is possible that the revenue will be still less than it is now, that the same fatal course may be pursued. I do not think that it is the fault of the Chancellor of the Exchequer. He is in a very difficult position. But the fault lies with the Government and with the whole conduct of the Government during the last four years. Though I have been repeatedly urging them to economise, they will not do so.
The fault lies to a certain extent also with the House of Commons, because, while Members are vociferous on the platform as to the need for economy, they are by no means so desirous of it when an actual reduction is proposed in Committee, and there are no greater offenders in this respect than the Labour party. I do hope that the Chancellor of the Exchequer—and I am encouraged in the hope by the excellent speech which he has made—will impress upon the Government the necessity of reducing expenditure. The Civil Supply is the side on which it ought to be reduced. There is plenty of room for it—at least£150,000,000, if you cut down various offices and Ministries which exist. It will be unpopular, but we cannot help
that. We have got to such a state that we must do something of that sort. It is preferable to beginning to borrow. It is no uncommon thing in South American States and other places of that description to borrow money to pay your interest. That is practically what the Government are doing at the present moment. It may be said that the sum of£25,000,000 is a small sum, but it is no excuse because the baby is only a little baby, and though the borrowing is only£25,000,000, that is not a course which we ought to pursue. As the Chancellor of the Exchequer has returned, and though I disagree with his suggestions, I believe that he will agree with me as to the necessity of meeting our definite obligations without borrowing.

Mr. PRETYMAN: As the Chancellor of the Exchequer is here, I do not want to lose any time in thanking him on behalf of those who are interested in agriculture for the concessions that he has made to occupiers and holders of agricultural land. I can assure him that the reduction under Schedule B of one year's rent and the extension of the principle of the allowances for expenditure on maintenance and repairs will be very much appreciated, and appreciated all the more because my right hon. Friend made it clear that neither he in giving nor agriculture in asking for this relief did so from the point of view of any special treatment. My right hon. Friend made it clear that he had been handed all the figures, which some of us have had the honour of putting before him, and that he had satisfied himself that the alterations he was making were in the direction merely of putting the taxation of the owners and occupiers of agricultural land on the same general level as the taxation of the rest of the population. What we have always advocated—I and my friends —is that it is the principle of Schedule D which we want applied as nearly as possible. If that principle, that a man should be taxed on the actual profit he makes, is applied to agricultural land and on the same general basis as to all other industries, we have no right to complain. One point to which the Chancellor of the Exchequer did not refer is very urgent. It is that some relief should be granted in the direction of a reduction of the rates upon agricultural land. I do not want to press that point now. The right hon. Gentleman spoke of the increase in the allowance to be given for repairs and
maintenance of agricultural property. The present fraction is one-eighth on land and one-sixth on buildings. I think the right hon. Gentleman said it was to be altered to one-fourth.

Sir R. HORNE: I did not say that; I gave no details about it.

Mr. PRETYMAN: There is to be an alteration in the fraction?

Sir R. HORNE: indicated assent.

Mr. PRETYMAN: No doubt we shall hear the figure later. As to the abatement of 1s. in Income Tax, will that carry with it a reduction of the 3s. level of tax on small incomes? Could my right hon. Friend tell us or will he defer his reply?

Sir R. HORNE: I would much prefer to defer it.

Mr. PRETYMAN: We shall hear in due course. The right hon. Gentleman who leads the Labour party spoke about the interest on War Loans. He seemed to be under the impression that that interest was paid indiscriminately to rich and poor alike, and that everyone received the same interest. He indicated that more interest ought to be paid to the holder of War Loan whose circumstances were limited than to the large holder who was much better off. Surely, he realises that under the present graduated system of taxation the small holder who receives interest on War Loan gets either the full interest, if he is exempt from Income Tax altogether, or nearly the full interest, whereas the large holder of War Loan, who has a big income and is a Super-tax payer, has sometimes as much as 11s. in the pound deducted from the interest he receives, 6s. deducted directly at the source and a further 5s. or more deducted later in Super-tax. Therefore the actual interest now received by a man of large income from War Loan is not 5 per cent, but more nearly 2 per cent.
The Leader of the Labour party told us it was a sound principle that direct taxation should be levied upon personal profits and not upon industry. I agree with him entirely. But when you get direct taxation up to a certain point it ceases to be personal and ceases to be subject to the general policy which this House has applied to the steep graduation of taxation, the basis being that people who have a lot of money to spend can afford
to pay a tax on a very much higher level than people who have little money to spend. That is perfectly sound as long as the taxation is on a personal level. At what point taxation passes from the personal level to the level at which it must fall on trade and industry only is debatable, but no one will deny that at the present figure, or at the figure to which it has been reduced, or even lower than that, it is very much higher than can possibly be paid merely on the basis of personal and individual expenses. The principle of steeply graduated taxation is perfectly sound at the lower level, but is absolutely mischievous at the present level. The right hon. Baronet the Member for the City of London (Sir F. Banbury) referred to certain figures given in answer to a question I put to the Chancellor of the Exchequer last autumn. From this answer it was clear at the higher rate of Income Tax the sum of the three taxes, Income Tax, Super-tax and Estate Duty, amounted in the case of the higher incomes to 15s. 5d. in the pound. The person who would pay that 15s. 5d. in the pound would also have to pay Corporation Profits Tax, Succession Duty, the whole of his share of indirect taxation and the whole of his share of rates. It is practically 20s. in the pound. That means that the fund from which industry would be recruited and extended and from which employment would follow is depleted.
The most serious problem this country has to face to-day is the problem of unemployment. It is difficult to say what is the root cause of unemployment. There are causes which we cannot control. For instance, our customers are unable to pay for what they require and so on. As far as the thing is within our own orbit and power, I believe that the super-taxation of profits which are not personal, but are required to maintain and extend industry, is the principal cause of unemployment. The Chancellor of the Exchequer has taken a wise course to-day in reducing the heavy burden of taxation which bears upon industry. I do not look upon this as personal relief. Those who are getting the relief should look upon it as relief given to enable them to employ the money in industry, so to increase the production of the country and to restore some employment. There is the question of borrowing in order to make good our statutory obligations for repayment, a subject which was referred to by my right
hon. Friend the Member for the City of London. He seemed to be under the impression that the borrowing was to pay interest due. It is not to pay interest due, but merely capital. It is objectionable. Nobody likes the suspending of a sinking fund, but at present we have first of all to look to the way in which more money may be made and how more goods may be produced. It is not a bit of use raising money to pay for current expenditure when you are getting it only by depleting capital.
Last year I stated what is now generally admitted—that it was impossible to pay taxation out of revenue and that a large, portion of it could be paid only out of capital. The Financial Secretary to the Treasury denied that statement in the first instance, but I think he has now-come to see that it was justified, and the action of the Chancellor of the Exchequer to-day proves the truth of what I then said. The measures my right hon. Friend has taken to meet the situation must be regarded, not as a precedent for spending money as revenue at the expense of suspension of the sinking fund, but as meeting the urgent necessity of the moment which is to leave money in those places where it can be productively employed. Unless the money is productively employed, it is impossible that legitimate revenue can be raised. With taxation as it is to-day we have reached the fatal point where an increase of the rate of taxation would mean merely a reduction of real revenue. On general principles I support the proposal of the Chancellor of the Exchequer, and I thank him that at a time when the whole of the taxpayers of the country are suffering and it is very difficult to consider any class of taxpayer, he has found it possible on the ground of mere justice to give some relief to the agricultural industry. I do not claim that that industry is in a more distressed state than any other industry, but it is bearing in proportion to its means a wholly unfair burden of taxation now, and it will be grateful for the relief which the Chancellor of the Exchequer has been good enough to give.

Sir D. MACLEAN: I wish to ask the Chancellor of the Exchequer a question with regard to the course of business. What Resolutions does he propose to ask the Committee to give him to-night?

7.0 p.m.

Sir R. HORNE: I propose to ask the Committee to give me all the Resolutions to-night except the last one. That would be in conformity with the Budget practice, the last one being reserved to continue the discussion to-morrow. Under that system any question can be raised on the last Resolution. It will be understood that when I get those Resolutions, at whatever hour, then in accordance with the practice on Budget nights the Chairman would leave the Chair.

Sir D. MACLEAN: I assume that, in accordance with the usual practice, the Chair would allow on the remaining Resolution a general discussion on the Budget on the same wide lines as to-day? If that be so, so far as I am concerned and those for whom I can speak, we have no objection to the Government having the Resolutions to-night in Committee, as, of course, they can be discussed and, if necessary, divided against on the Report stage.

The DEPUTY-CHAIRMAN (Sir Edwin Cornwall): It has always been the practice to take the Resolutions that were essential on the day of the Budget, and it has become the custom to leave the one Resolution until the next day, and then to have a general discussion upon it.

Captain WEDGWOOD BENN: Do the Resolutions include any Resolution which provides for the remission of the Excise duty on sugar?

Sir R. HORNE: No.

Captain BENN: That would have to be done in the Finance Bill.

Sir WILLIAM PEARCE: I have heard a good many Budgets in this House, but I do not think any Chancellor has ever been confronted with a more difficult position than has the right hon. Gentleman to-day. He has had to choose between continuing the redemption of debt and the relief of taxation. In choosing the relief of taxation he has been accused of taking the short view. I hope, on the contrary, he has taken the long view, and I congratulate him on the decision he has made. The one fact which is of extreme importance is to recover the industrial and commercial prosperity in this country. Without that, we not only cannot carry an expenditure of£900,000,000, and unless our trade improves we shall find difficulty
even in carrying£800,000,000. I can see no probability, unfortunately, in the next few years of any Chancellor having to budget for less than£800,000,000, and he will be clever if he keeps it down to that amount. With£350,000,000 for debt interest, and nearly£100,000,000 for pensions, it is hardly conceivable that a total of£800,000,000 can be improved upon. Therefore, although you can change the Government you cannot change its problem. We have to face the necessity of raising a very large revenue in the future.
At the present time, when industrial conditions are so depressing and every industry is fighting for its life and is without any money because it is paying its taxes out of capital, the Chancellor of the Exchequer was bound to make a reduction in taxation. In doing so I believe he has been wise in his own interests. After all,
There is that scattereth, and yet in-creaseth; and there is that withholdeth more than is meet, but it tendeth to poverty.
To-day the Chancellor has been wise in his day and generation. The productivity of the Income Tax does not depend on the rate at which it is levied; as has been pointed out, you can get to a point where the rate is so high that the production of the tax decreases. I have very considerable hopes, because I am an optimist as to the possibility of the recovery of industry, that this reduction of the tax from 6s. to 5s. may not mean any very considerable loss of revenue. If you once get the volume of the subjects of taxation increased you can get with a 5s. tax as much as with the present tax of 6s. All the best judges in finance with whom I am acquainted seem at the present time to be of one opinion, that there is a danger of overloading the taxation of the country; a 6s. Income Tax in the long run would be bad business, and that a reduced tax would be good business to the State itself. If this be true, and if it does encourage industry and commerce to revive and helps the clouds to clear, then not only will the Government get a satisfactory result in regard to revenue, but they will do so in the region of un-employment
What we want to-day is to get the wheels of industry going again. There were signs—except for those unfortunate industrial troubles, the signs would have
been most encouraging in the last six weeks—of improvement in nearly every large industry in the country. I am sure that the filip and the tonic that the Chancellor of the Exchequer has been able to administer to-day by some reduction in the Income Tax will be of inestimable value in promoting a better state of affairs. Although he is giving something away, I believe that in the long run the revenue itself may improve by the concessions has been able to make this evening. If the volume of income is increased and if the enormous quantity of unemployment is decreased, it is obvious that the revenue will be improved, and the concessions which the right hon. Gentleman has made to-day will, I hope and believe, be in the very best interests of national finance.

Mr. MOSLEY: The Chancellor, with his accustomed felicity, has selected the 1st of May as a suitable date on which to introduce a Budget containing a substantial remission of taxation, and I have no doubt that he has materially improved his chance of being crowned Queen of the May in the subsequent electoral festivities. Before I follow him into the happy adventures which no doubt await him, may I draw attention to one of the many unprecedented features of the present Budget which has not yet received the comment in this Debate which I feel it deserves. For the first time in the history of this country the Budget proposals appear to have been revealed some days prior to the Budget statement. On Friday last an article appeared in the "Daily Chronicle" which, as is well-known, is the principal organ and supporter of the present Government. That article was not a mere surmise of the Budget proposals. It did not hazard the usual guesses as to the Chancellor's intentions. It definitely stated decisions which it alleged had been reached at a Cabinet meeting on the previous evening. The article of Friday last is headed, with large headlines,
Budget good news," "Cabinet decisions yesterday," "Income Tax cut," "Reductions on tea and sugar," "Lower postal rates.
This prescient correspondent then proceeded to open his article by the remark that
The Cabinet met yesterday at 10, Downing Street, Mr. Austin Chamberlain presiding,
to come to final decisions on the chief Budget issues.
He went on to recite what the decisions were, not as any surmise, but as definitely ascertained facts. If the right hon. Gentleman reads the article in question, he will find that what I state is correct. It says:
A reduction of the Income Tax was agreed on. The exact figure did not leak out from any official source——

Sir R. HORNE: I am afraid my hon. Friend is a very jéjune reader of the newspapers, if he attributes this only to the "Daily Chronicle." If he takes up any newspaper of last week, he will find that it not only not makes surmises, but contains definite assertions as to what has been done.

Mr. MOSLEY: I anticipated that the right hon. Gentleman would make some statement of that kind, and I took considerable pains to look through the papers of last week. There was not another newspaper which made a definite statement of that kind concerning a definite decision reached at the Cabinet meeting. There were many surmises and guesses, attaining a particular degree of accuracy, that I quite admit, but there was no definite statement arising from alleged Cabinet decisoins. What is more, no other journal, until this article had appeared, was able to forecast with entire accuracy what the actual Budget proposals were. [HON. MEMBERS: "What about sugar?"] This article is only wrong in one respect. It under-estimates the alleviation which the right hon. Gentleman proposes to the taxpayer in the matter of tea; otherwise the forecasts of its correspondent were entirely correct. These Budget proposals were contemplated, embracing considerable reductions and alterations over a wide field. How was it that not only the "Daily Chronicle," but subsequently the entire Press, for the first time that I have heard or read of, was able accurately to foretell the Budget proposals of the right hon. Gentleman? That, surely, is a matter deserving of some inquiry from the right hon. Gentleman, when a very evident leakage, whether specifically in the direction of one newspaper or another, is manifested, and he finds his entire Budget proposals correctly adumbrated in the Press some days prior to his statement in the House.
The right hon. Gentleman in his exordium dwelt at some length upon what he conceived was the discomfiture of those who last year had prophesied the collapse of his Budget. I venture to contend, however, that those prophecies have been entirely justified by the statement he has just made. The contention of last July, to which he referred in derisive terms, was that a grave decline in the revenue of the country was to be anticipated, and that unless expenditure could be substantially reduced a deficit would be apparent on the Budget being introduced. What have been the facts? The right hon. Gentleman states that the revenue of the country in comparison with the Estimate has declined by£91,000,000 and that he has effected savings on the original Estimate of expenditure—I include, of course, his estimate of£98,000,000 which he allowed for Supplementary Estimates—of no less than£69,000,000. Even so, the£80,000,000 which he then adumbrated as being available at the end of the year for debt redemption was not available, and in fact he only had a balance of£45,500,000 in his hands. In other words, the Budget failed to meet its declared obligations at the time of the Budget statement by some£35,000,000. If the right hon. Gentleman, under pressure from various directions, which he dwelt upon in the course of his speech, had not been successful in economising to the extent of£69,000,000, then a deficit of some£22,000,000 on the year would actually have occurred.
The history which the right hon. Gentleman has supplied to the Committee this afternoon entirely supports the contention of those who, even before the Budget passed its final stage last year, prophesied that unless expenditure could be substantially reduced below the estimate of the right hon. Gentleman there would be a deficit on the year, owing to the decline of revenue below his estimate. We have had supplied to us this afternoon Estimates of revenue and expenditure which may or may not prove as erroneous and as faulty as those supplied last year. This year the right hon. Gentleman is not budgeting for any surplus; he is not even hoping to secure a reduction of debt, and he is only allowing£25,000,000 for those Supplementary Estimates, which in the past three years have averaged something like£100,000,000 a year. Further than that—as has already been argued, and as has been repudiated
from the Government Benches—the right hon. Gentleman is actually borrowing in the course of the current year to meet his obligations. He is borrowing in order to meet statutory Sinking Fund and contractual obligations to his bondholders. By borrowing in this manner he creates a fictitious surplus, and by that fictitious surplus he is enabled to reduce taxation. By a very simple equation that seems to point to the fact that in the present year we are actually borrowing in order to reduce taxation. This process has been welcomed by the hon. Member who spoke last, and by other commercial experts in this House, as providing a stimulus to trade in a time of depression. Surely, if we follow that argument to its conclusion the result is this, that in times such as the present it is better to borrow and have low taxation. If that be the argument, then it is the argument which Continental countries have been advancing ever since the War, and the argument which the right hon. Gentleman and his predecessor resisted with such indignation in past years. How often have I heard Government spokesmen declare. "We are not as other men. We are not like Continental people. We understand sound methods of finance. We are not going to stimulate trade by borrowing in order to reduce taxation. Let us stick to our old sound British methods." Then the right hon. Gentleman comes down this year and, with the enthusiastic approval of his supporters, proceeds to copy those Continental nations whom he has spent the last three years in condemning.

Sir R. HORNE: Will the hon. Member say which of the Continental nations to which he refers has balanced its expenditure by its revenue?

Mr. MOSLEY: I am afraid the right hon. Gentleman has entirely misunderstood the gist of my argument. I was arguing that Continental nations have borrowed to make their revenue and expenditure meet. The right hon. Gentleman and his predecessor condemned that, but now he is doing precisely the same thing.

Sir R. HORNE: No, not at all. The point I wish to put to the hon. Member is, "Can he tell me of any Continental nation which has not alone been paying off debts but has met its expenditure?"
Is it his contention that paying off debt is part of the necessary expenditure, or at what point does he stop?

Mr. MOSLEY: I was trying to point out that not a single one of these Continental countries has covered its expenditure by its revenue. They have all borrowed, and now the right hon. Gentleman is doing the same thing. [HON. MEMBERS: "No, no!"] I do not expect, however, that the right hon. Gentleman listened to the beginning of my argument. It was quite unworthy of his consideration. [HON. MEMBERS: "Hear, hear!".] I have become so accustomed to this attitude on the part of hon. Members on so many occasions when circumstances have proved us to be entirely correct, that I am not so sensitive to it as when I first introduced myself to Debate.

Sir R. HORNE: May I put it to the hon. Member that if we are to meet our expenditure as the result of borrowing we must be increasing our debt? Does he say so?

Mr. MOSLEY: That is precisely one of the points upon which I wished subsequently to invite an explanation from the right hon. Gentleman. It is difficult to see how we can borrow-without increasing our debt, and yet in the course of his speech the right hon. Gentleman did make that contention. I understood from him that we are borrowing to meet certain Sinking Fund obligations and certain contractual obligations to our bondholders, to the amount of some£30,000,000 or£35,000,000. In former years these obligations were met from revenue. This year the right hon. Gentleman is borrowing to meet those obligations. By this means he creates a surplus, and by creating this surplus through borrowing he is able to reduce taxation. It seems to me to follow by a simple equation, as I have said, that therefore we are, in effect, borrowing to reduce taxation, and whatever conundrum the right hon. Gentleman presents to me as to whether or not we are actually increasing our debt, it in no way meets the point that we are creating a fictitious surplus and that by this means the right hon. Gentleman is enabled to reduce taxation. I hope either he himself or the hon. Member who replies for the Treasury will be able to resolve his own conundrum, but
I confess it seems to me irrelevant to the point I was trying to make.
There is one possible advantage in the method pursued by the right hon. Gentleman. He is, by a devious route, carrying out a plan which has been frequently advocated from these benches, and is, in fact, rationing the country down to a low limit of expenditure. The process was successfully applied last year when the falling revenue compelled the right hon. Gentleman to save on the year by no less a sum than£69,000,000 in order to avoid a deficit. Having no surplus available and having only£25,000,000 against those Supplementary Estimates, which have eaten so deeply into our financial resources in the past, the possibilities are that the right hon. Gentleman this year— as indeed, he foreshadowed in his statement—will have to economise to a considerably greater extent than he has estimated for. The trouble about the policy of not shaping one's plans definitely beforehand and knowing exactly where one is going, but of having to economise in a moment of panic when it is found that revenue will not cover expenditure, is that the economies usually have to be made on services where economy is most vicious. For instance, we cannot in the middle of the year, if we find our revenue is falling suddenly, withdraw from great foreign commitments, involving the upkeep of considerable military forces, but it is comparatively simple in such circumstances, to cut the pay of some worthy civil servant or the pay of the teachers and to economise generally on social services. We find that the compulsory rationing, which the right hon. Gentleman has initiated as a method of finance, applied suddenly in the middle of a year when it is discovered that revenue cannot cover expenditure, will not hit those forms of expenditure which are most vicious, but will fall on many forms of expenditure which are far more worthy of our consideration.
The right hon. Gentleman has adumbrated a definite revenue and expenditure. No one can say whether or not the revenue will be realised. Most of us can hazard the prophecy that the expenditure—anyhow the£25,000,000 for Supplementary Estimates—which he has allowed for, will be exceeded unless the right hon. Gentleman can economise substantially as he did last year. He, in all probability, will find once again that his Budget has
failed to meet its obligations. The right hon. Gentleman may hope that the result of a boom in trade, arising from this remission in taxation, may, in respect of future taxation, assist him in budgeting in future years, but, as has been pointed out, no immediate advantage to revenue in the present year will be derived from this remission of taxation, owing to the triennial basis on which our Income Tax is assessed. The advantage will not accrue until subsequent years. The right hon. Gentleman has presented a Budget which promises to fail even more conspicuously than his Budget of last year which has failed egregiously, and I suggest that if he ever has the opportunity of clearing up his own Budget mistakes, the right hon. Gentleman should on that occasion seek to budget on facts and not on aspirations.

Mr. MARRIOTT: The hon. Member who spoke last hinted not obscurely in his opening statement that this was to be regarded as an electioneering Budget. The implication is not quite a worthy one. I intend in a moment to apply another epithet to the Budget, but I confess chat I also am somewhat uneasy as to the borrowing of this£25,000,000 apparently to create a surplus which is more or less unreal. I am not quite certain, however, that the hon. Member for Harrow (Mr. Mosley) fully apprehends the nature of this transaction. Had the purpose of borrowing of this money been in order to meet expenditure, then I should have condemned it quite as strongly as the hon. Member for Harrow, but, as I understand it, that is not the case, because we are told the money is to be borrowed in order to meet, not expenditure, but capital obligations. I admit that these?, are contractual obligations which in happier circumstances certainly should have been honoured out of revenue, but there is a distinction between borrowing in order to meet expenditure and borrowing in order to replace existing capital. It is for replacing capital that the right, hon. Gentleman, as I understood him, proposes to borrow the money.
Now if I were asked in a single word to characterise this Budget, I should apply to it the epithet, not an electoral, but a psychological Budget. I believe that the right hon. Gentleman has had psychology rather than economics in view, and I am not blaming him for a moment for taking that point of view. Perhaps I may be
allowed to join with other hon. and right hon. Members in congratulating, if I may respectfully do so, the Chancellor of the Exchequer on having expounded a very difficult Budget in an extraordinarily luminous and skilful manner, but no Budget in my memory—and my memory of Budgets goes back, I am afraid, for five and thirty years—has been awaited with such a measure of expectation and of curiosity as the Budget which has been expounded to us this afternoon; nor are the reasons far to seek. On the one hand, the people of this country know for the first time in detail how we stand in regard to national expenditure, and for that fact, as I have said more than once in this House, we owe a profound debt of gratitude—acknowledged, perhaps, in words, but not in effective action by the Government—to the business Committee presided over by Sir Eric Geddes. For the first time, then, we know precisely how we stand—and when I say "we" I mean the nation, and not the Members of this House only—in regard to the details of our national expenditure. That is the first reason why this Budget was awaited with unprecedented curiosity and interest. The second reason is the appalling condition of our trade. The trade conditions, in my knowledge and experience, have never been worse, and as a result every Member of this House has been confronted in his own constituency by the hideous spectacle of unemployment. My right hon. Friend beside me, the Member for Chelmsford (Mr. Pretyman), alluded to that spectacle as amongst the most grievous by which we could possibly be confronted, and most of us have found it very difficult to speak to these unemployed men any words of real encouragement or hope.
I say trade was never worse; and taxation was never so high, and, of course, employment depends on trade. You may meet the problem of unemployment with one palliative after another, but there is no cure for unemployment except employment, and employment and trade were never worse than they are to-day. Look at the returns which have lately been given to us—on which I presume this Budget was based—by the Board of Trade. Values are not of much account to-day, but if you take the total of our imports for last year, they amount to£1,086,000,000
and our exports to a total of£810,000,000, but if you turn from values to volume a very different picture is presented. The imports for last year represent in volume only 74 per cent, of the imports of 1913, and the exports of United Kingdom produce represent last year only 49 per cent, of the exports of 1913, so that a very eminent authority has lately estimated, on the basis of these figures, that the foreign trade of this country in 1921 amounts in volume to not more than 63 per cent, of the foreign trade of 1913. The same authority—I am referring to Dr. Cramond—putting our national income for the year 1921 at£2,700,000,000, compares it with£2,400,000,000 in 1913— not the Government income, but the national income, the aggregate of individuals incomes. If you reduce that to terms of 1913 values, you get a national income to-day, not of£2,700,000,000, but of£1,440,000,000; in other words, the national income is about 65 per cent, of the income of 1913, in 1913 values.
I quote these figures because the one has a remarkable bearing on the other. Our external trade is about 63 per cent, down on 1913, and our national income is about 65 per cent, down on 1913, showing the extraordinarily close connection—and this is the point which I want to establish —between the national income and our external trade; but if trade and employment have never been so bad, taxation has never been so high. My right hon. Friend the Member for Chelmsford has referred to the extraordinary burden of taxation which we are attempting to carry to-day. Going back to the year 1913, the tax revenue of that year represented only 9 per cent, of the estimated national income. In 1920 it represented 27 per cent., and if I add rates to taxes to-day, after deducting£345,000,000 of interest on the National Debt, which for this purpose I may legitimately deduct, the taxes and rates amount to 34 per cent., or more than a third, of the whole national income. If one turns from that to the per capita taxation, the figures are equally appalling, but I turn from the question of taxation in the past to the possibilities of next year, to the Estimate which the Chancellor of the Exchequer has put before us for revenue for 1922–23.
On the whole, I am comforted by the figures which he placed before us, and I recognise that on those figures he was not
merely entitled, but, I think, impelled, to considerable remissions of taxation, and, in the first place, I thank him very cordially for what he has said, and still more what he has done, in regard to the remission of Post Office charges. I very strongly supported a year ago the Postmaster-General when he imposed additional charges, because I hold that no service of that kind ought to be carried on by subsidy from the State, but, on the other hand, I applaud the Chancellor of the Exchequer to-night, if I may be allowed to do so, for permitting the surplus on the Post Office revenue to go to a remission of the charges on that service. I think the State should neither subsidise the service nor make a profit out of what is really a tax on industry. Then I come to say one word in regard to the Corporation Profits Tax. Speaking for myself, I should have been glad if the Chancellor of the Exchequer could have seen his way to the entire abolition of that most unequal and, as I think, iniquitous imposition, the Corporation Profits Tax, because—and this is what I meant by describing in no unfriendly phrase the Budget as a psychological Budget—the Corporation Profits Tax is not spectacular in the same sense as is the Income Tax. Its existence is hardly realised by a considerable section of the general public, and therefore there is less incentive to its remission, but it is in effect an addition to the Income Tax. It is a more or less camouflaged addition to the Income Tax, and, speaking in general, it is equally penalising to trade, and is much more irritating in its incidence.
Two years ago, when the tax was first imposed, I made a very strong appeal to the then Chancellor of the Exchequer at any rate for the exemption of statutory or public utility companies, and I am afraid that my right hon. Friend the Lord Privy Seal thought that I was rather grudging in my gratitude when he gave me a remission down to the end of 1922. I am very glad indeed that my right hon. Friend the present Chancellor of the Exchequer has seen his way to a suspension of the Corporation Profits Tax as regards public utility companies for a further period of three years—I presume from December, 1922, the time when the tax would otherwise have been imposed on them—but I confess that I would very much rather he had seen his way to a total exemption of
these statutory companies. It is very hard for these public utility companies, which cannot increase their charges, to be subject to a tax which is in effect a deduction from one portion of their profits. Perhaps I may be allowed just to illustrate what I mean by reference to the accounts of one or two railway companies. Take, for example, the London and South Western Railway Company. The operation of this tax on that company would have meant on the figures of 1921 a tax of rather over 10 per cent, on their ordinary stock, but as their ordinary stock is, as in the case of many other companies, divided into preferred and deferred stock, it would have meant on the holders of the deferred ordinary stock a tax of no less than 31.3 per cent., reducing the dividend for that year, 1920, from 40s. to 27s. 6d., which is equal to an additional Income Tax of 30 per cent. I am very glad the Chancellor of the Exchequer has seen his way to a suspension of this impost for a further three years. I very much wish that he had not left it in suspense, but had given total remission—at any rate, in the case of the statutory companies, so far as one Budget can grant it, for it is a terrible burden hanging over the future— and, still better, if he had got rid of the tax as a whole.
With regard to the proposed remission of Income Tax, we have heard from more than one speaker from the benches opposite this afternoon that this is a concession to the wealthier classes. I join issue with that sentiment. It is perfectly true that the Income Tax is actually paid by a comparatively small number of people. I think the people who actually pay Income Tax do not exceed 2,400,000, but in the protests which have come to me, as they have come to every other Member of the House, during the last few days, against the continued collection of Income Tax at the present rate, I have been very much struck by the fact that a very large proportion of those protests come from people who, I imagine, do not pay Income Tax at all.

Mr. AMMON: The Harmsworth stunt has done that.

Mr. MARRIOTT: I think I am sufficiently acquainted with the origin of the agitation, but I do not quite understand the point of the interruption of the hon. Member. My point was that my constituents, at any rate, were intelligent
enough to perceive that a remission of the Income Tax was as much demanded in the interests of the poor as it was in the interests of the rich. [An HON. MEMBER: "And more!"] Perhaps more, and that is the point I would commend to my hon. Friends opposite. My constituents know, what not everybody realises, apparently, that an Income Tax is a burden not only on those who are directly assessed to it, but on the whole trade of the country. My right hon. Friend the Member for Chelmsford (Mr. Pretyman) entered on an exceedingly interesting disquisition as to the precise point at which a personal tax passed into a burden on industry. I maintain that an Income Tax levied at anything like approaching the present rate is a direct burden upon the industry of the country, and cannot be regarded only as a personal tax. We have relied in this country, as no other country in the world has relied, upon direct taxation. I find that, even in the year before the War, we were collecting in direct taxation 31s. per head, as compared with 3s. per head in the United States of America. In the last year for which I have figures, we were collecting£15 per head in direct taxation compared with 47s. in France and 43s. in Italy. We have deliberately adopted this method of taxation, though I may point out that our adoption has been comparatively recent. Times were when there was far greater equality between direct and indirect taxation. In fact, if you go back to 1841, you will find that the proportions between direct and indirect were almost exactly the reverse of what they are to-day. To-day I suppose we are collecting something like 80 per cent, of our revenue from direct taxation—at any rate that was the proportion in the last year of the War. If you go back 80 years, you find the figures almost precisely the reverse. I hold that the good period of taxation was about 30 years ago, when about 50 per cent, was collected from direct and 50 per cent, from indirect taxation.
I am grateful, both as an economist and also as a psychologist, for the remissions of taxation which have been made. I believe they will be an enormous encouragement to the trade and traders of this country, and will lead to enterprise in many directions. I a little bit regret
that the Chancellor of the Exchequer has been compelled to take speculative chances, and I wish that he had balanced his Budget in another way, not only by remission of taxation, but far more by the curtailment of expenditure. The Chancellor spoke, I think, not quite fairly when he said that those of us who have shown ourselves zealous in regard to a reduction of expenditure were inspired by malevolent motives.

Sir R. HORNE: My hon. Friend is not taking upon himself the burden of the accusation I made against those who persistently reiterated that the Government had made no reductions in expenditure at all? That was the malevolence to which I referred.

Mr. MARRIOTT: I am much obliged for the correction. I hope I have never been so stupid as to say the Government have made no reductions in expenditure. The burden of my complaint has been that they have not made nearly enough reduction. It has not been inspired, however, by malevolence, but by benevolence towards my right hon. Friend who, I should have imagined, would have been the first person in the world to acknowledge and encourage the support of those who wanted to help to curtail expenditure.

Sir R. HORNE: I have done so.

Mr. MARRIOTT: There is one other feature about which I am a little uneasy. The Chancellor of the Exchequer has taken some credit, I think, to himself for including a sum of£25,000,000 for contingencies for Supplementary Estimates next year. When I was drawing up my own Budget in anticipation of to-night, I put down a sum at least double that amount, and I doubted whether that was enough. For the last three years we have had Supplementary Estimates averaging£100,000,000 a year. I think it is a very sanguine spirit—as, indeed, the whole spirit of my right hon. Friend throughout his Budget has been, happily hopeful—to anticipate Supplementary Estimates of only£25,000,000. One word only in conclusion. Any Chancellor of the Exchequer can remit taxation. Almost any Chancellor of the Exchequer can impose taxation, even if he cannot command the revenue; but it takes a really great Chancellor of the Exchequer, like Mr. Gladstone, for example, to condescend to the
saving of candle ends and cheese parings, wherein true economy consists. Therefore, my final appeal to my right hon. Friend would be this—I am afraid final only for the moment, as he will guess—is to follow the example of his illustrious compatriot, and condescend in finance to things of low estate, and to save pennies rather than to spend pounds.

Mr. G. BARNES: I rise for a few minutes, first of all to congratulate the Chancellor of the Exchequer on having the privilege to submit a Budget which is very good in form, and not so bad in substance. I have been here, not like my right hon. Friend the Member for the City of London (Sir F. Banbury) for 30 years, but I have been here long enough to have heard 16 or 17 Budgets, and I have not heard one in which the facts and arguments have been more skilfully marshalled and concisely put. The outstanding feature of this Budget to the man-in-the-street will be the remission of taxation, and, on the whole, assuming that remission of taxation is justified, then I think the Chancellor has made a very fair selection of subjects for that remission. On the whole, I should say, of course, that direct taxation is much bettor than indirect for many reasons, the chief of which are, first, that the indirect taxation comes from the poorer members of the community, and, secondly, that the indirect taxation, which is levied upon those members of the community, does not all reach the Treasury. Therefore, for those two reasons, and for the further reason that direct taxation is a form of taxation in which everybody knows what he has got to pay, I would much rather have direct than indirect taxation.
8.0 P.M.
There are, of course, indirect taxes, and indirect taxes. I have no doubt the Chancellor of the Exchequer, like all of us, has been bombarded during the last two or three weeks with postcards and letters about the remission of taxes on whisky and beer. I have had as many as 50 odd in one day, and I dare say, if I totalled up the whole of the postcards and letters I have had about whisky and beer, they would run into a good few hundreds, possibly a thousand. I am glad he has been proof against that, because it had all the appearance—although it purported to be an agitation in the interest of those working-men who want
a drop of whisky or beer at night—of a skilfully worked agitation from a centre in which there was any amount of money to spare. I have also had many appeals for the abolition of the Entertainments Duty. They have not the slightest weight upon my mind. The Entertainments Duty, as a matter of fact, is not paid at all by those people who have been busy circularising Members of Parliament, but is paid by the people who go to see the entertainments. Therefore, I am glad again that the Chancellor was not taken in by, as I thought, a rather superficial agitation. As I say, I think he has made a fairly good selection, and I say that, notwithstanding that the Income Tax, of course, falls to be borne, in the first place, by the relatively well-to-do man. I regard the Income Tax as a very important tax bearing upon industry, and I believe that the high amount of taxes imposed in that way has been a very serious check to industry during the last year. I welcome this proposal not because it is going to reduce the amount of taxation levied upon the relatively well-to-do, but because I believe that what will be left in their hands will very largely be used in order that they may feed and sustain industry, and that that, therefore, will lead to a reduction in the number of the unemployed in the country. This latter, to my mind, is the most serious problem with which we have to deal.
Dealing with this matter of Income Tax, might I say a word about the point made by the right hon. Gentleman the Member for Chelmsford (Mr. Pretyman) in regard to the statement made by my right hon. Friend the Member for Platting (Mr. Clynes)? The right hon. Gentleman the Member for Chelmsford was rather unfair or perhaps he misunderstoood the leader of the Labour party, for he charged my right hon. Friend with having made a claim in regard to the payment of interest upon the National Debt that some differentiation ought to be made in favour of the small holders of that stock. I never heard that suggested. What he did say, so far as I understood him, was that the payment of that interest was a great burden upon the community He did not suggest that there should be any lessening of the rate of interest payable to the holder of War Stock, but he did suggest that some ways and means might be found whereby not
only the interest but the principal should be paid off more rapidly. With this I entirely agree. There should be found some ways and means of raising new loans or imposing higher taxation upon the higher-paid portion of the community whereby the National Debt could be paid off more rapidly, and I think that that would be a very good thing. But my right hon. Friend had something more to say in regard, as I think, to suggested differentiation as against the holders of the National Debt in favour of other people who put their money into other forms of investment. I cannot agree with that at all. It seems to me, if there is to be any differentiation as between one man who lent his money to the Government during the War and was paid 5 per cent. and the man who put his money into some form of industry or enterprise and got 10 per cent., that the differentiation should be in favour of the man who lent to the Government rather than the other man. I have no sympathy with these specious pleas sometimes put up about reducing the interest on the National Debt, but rather would I have the National Debt cleared off as rapidly as possible, either by some process such as has been suggested or some higher taxation upon the general community.
I welcome the remission of the 4d. upon tea. I rather favour taking the whole amount of 4d. off tea than splitting the amount, as might be done, by the remission of the taxation, say, between tea and sugar. The consumer is more likely to get the benefit of the 4d. than he would be if 2d. had been taken off tea and 2d. off sugar. Like other speakers, I am somewhat concerned about the difficulty that will follow in consequence of what the Chancellor of the Exchequer has done to-day. The next Chancellor—that is assuming there is an election before next year—or the right hon. Gentleman himself, in the event of there being no election—is going to be confronted with a very serious problem. In the first place, he has got to make good the money which he has taken for the remission of taxation and which ought to have gone to the Sinking Fund. Moreover, there are certain forms of expenditure that will then have to be met which have not yet had to be met, for instance, the£50,000,000 of the American debt. I hope that that will be paid without demur
Still, provision has to be made for it. Then, there is the running out of the surplus stores. The amount is less this year than last year, something like£70,000,000 to£80,000,000. The probable income from those stores will again be lessened similarly. There are other things that will have to be made good next year. Might I suggest one or two ways and means by which these shortcomings may he met?
First of all I would support the suggestion already made about funding the pensions costs. I suppose the cost of pensions will run for perhaps 30 years. The War was fought not only for those who are living now, and paying at the top rate, but it was fought for those who will come after. It seems to me to be a perfectly fair proposition that the total cost of the pensions, spread over 30 years, should be paid more equally year by year instead of this generation paying a larger amount compared with what will fall due in 30 years. Therefore I would suggest that something might be done next year—I quite admit it is impossible to do it this year in view of having taken the money from the Sinking Fund—but next year something might be done in the way of funding these pensions payments so that we may have in the early years some considerable relief from this taxation.
A great thing, however, still remains to be done—and here I entirely agree with the right hon. Baronet the Member for the City of London—in the way of reducing Governmental expenditure. No one going into Government offices at the present moment can do so without seeing the methods employed there are far different from those in ordinary business life. I suppose many of us read what was in the newspapers recently about the rapid rise of salaries in Government offices, and the instance given of a salary of£500 of 10 years ago now raised to£3,000! It is perfectly obvious that that sort of thing would ruin any business concern. There is no reason why the Government should not be as careful about the nation's money as a business man is about his own.
A little while ago on this side of the Committee reference was made to the Inter-Allied Debts and a suggestion made that something might be done to wipe them all off. For my part, I hope that nothing will be done by the Government I to ask in any way an exemption from the
payment of debts that have been incurred in this War. Nothing, it seem to me, could be more calculated to lessen our credit than doing that. At the same time I quite agree that the arrangements about these national debts as between one country and another is not a mere matter for isolated or separate arrangement between debtor and creditor countries, but is rather a matter of arrangement by the countries as a whole at some cenference where the matter could be discussed. I hope that these matters may be discussed at Genoa, and I would express the hope that if any arrangement can be made at Genoa as between the countries represented there, that that conference might be followed by another at which perhaps the United States may be represented, and at which the whole question could be discussed in the light, not of the indebtedness of one country to another, but in the light of the good of the whole and the promotion of trade from one country to another. What mostly concerns those countries who have lent large sums of money, and are now exacting large sums of interest, is not the getting back of that money so much as their power of absorption and its bearing on trade. This, I hope, will be the line followed in regard to the national debts. However, I am drifting away from the immediate matter, which is the Budget. On the whole, I think the Chancellor of the Exchequer is to be congratulated upon having, in the Budget, for the first time since the War, embodied proposals for the lessening of taxation. I hope, and believe, that lessened taxes will have a good effect in stimulating trade and thereby lessening unemployment amongst us. So far as indirect taxes have been remitted, I trust that that also will be a considerable relief to the poorer members of the community and, in turn, stimulate trade by increasing their purchasing power.

Mr. SEXTON: The right hon. Gentleman the Chancellor of the Exchequer is to be congratulated, not so much upon the subjects in his Budget, as upon the manner in which he has produced it. I recognise the difficulties of the position of a Chancellor in existing circumstances. I also recognise that amid the disadvantages of the situation he has kept our national credit up to the top, and that this Budget, too, will redound to the credit of the nation. I was rather
interested with the right hon. Gentleman's statement that the reduction of 1s. in the Income Tax would be to the advantage of trade and would increase it. I am not a financier. Therefore I do not know whether that will be the effect or not. I am prepared to accept the statement; but I have no doubt, not the slightest—I am sure of it—that there are many struggling employers to-day—I say this even at the risk of being accused of heresy in certain circles outside the House —whom the reduction in the Income Tax will certainly help. If it will have the result of helping the employer to bring about better trade I have no hesitation in accepting the principle as advocated by the right hon. Gentleman.
But there are other people who are not in trade who are very largely interested in the reduction of the 1s on the Income Tax. There are great financiers, not only national but international, who will receive an enormous advantage from the reduction of this tax. One of the greatest I believe—it is so reported—who with his family invested money in war centificates and bonds will alone receive an advantage by the 1s. reduction of at least£20,000 a year. I am not complaining of that so much, because, after all, big financiers with big money and big fortunes who came to the help of the country in the time of war served a very useful purpose. I do not object at all to the amount of interest derived from the War Bonds. I will derive a small yearly advantage, perhaps£4 or£5, and therefore I accept the principle. But what I want to draw the attention of the House to is the hardship of the present system of Income Tax, and how it bears upon those who ought to be partners in industry, and ought to help to build up the industry of this country—that is the ordinary workman himself. I am pleading again for the bottom dog in our industries who has no particular or permanent employer, and he is a man in regard to whom I might say:
They rattle his bones over the stones
He is only a casual whom nobody owns.
He has never got an employer, and these men are included under the Income Tax Regulations. I believe an arrangement was made by the right hon. Gentleman's Department or by the right hon. Gentleman's predecessor that all these men should be assessed, and if an Income Tax is to be imposed at all,
I agree it ought to be imposed proportionately on everybody in the United Kingdom. I think, however, that when an exception like this is pointed out some consideration ought to be given. I believe the right hon. Gentleman's predecessor arranged that the casually employed man should be assessed quarterly. The intention of that proposal may have been good, but it has turned out in practice to be bad, because the casual labourer has his lean as well as fat quarters. A man may have a fat quarter this quarter, but he may have had a lean quarter before, and he may have, during that time, incurred liabilities in what is known as the "tommy shop," and in order to pay for the lean quarters he has to obtain credit. Unfortunately these men have been assessed upon the fat quarters during the loan quarters. As a matter of fact, the application for the payment of Income Tax never reaches these men when they are handling the money during the fat quarters, and the result is they have spent their incomes and cannot pay Income Tax. I know cases where summonses have been issued against them, and they have had to lose a day or two attending Court in order to give their explanation. May I read a letter from one of my own constituents, who is an ex-soldier I He says:
I am an ex-soldier, being invalided out of the Army with malaria after 3£ years oversea. I am a miner, but have never worked since the lock-out. and I have had three quarters' Income Tax sent to me. Can I claim for the period I have been out of work, because the collector says as soon as I start work he will want the money? I would like to know if I go to prison, does that pay the debt? Some people say it does and some people say it does not.
I hope my right hon. Friend will prevent any injustice of this kind being carried out. Figuratively speaking, these men have the sword of Damocles hanging over their heads all the time, and they are pursued all ends up. I want the right hon. Gentleman to consider if in cases of this character there could not be some modification of the application of the Income Tax to such men. I trust that, having brought this question prominently before the House and the Treasury, the right hon. Gentleman will give such consideration to these cases as they eminently deserve.

Mr. WISE: I wish to preface my observations as a back bencher by thanking the Chancellor of the Exchequer for the very clear way in which he has explained the difficult figures of the Budget. I feel myself that the Budget is made up of the problems of unemployment, of wealth, and of taxation. Perhaps I may be allowed, with the permission of the Committee, to refer to what happened during the Napoleonic Wars and after that period. Previous to these wars we had a debt of£50,000,000, and we ended them with a debt of£800,000,000. There were great difficulties in the people realising the large amount of that debt, and they arose owing to various details as to the people not realising the new basic value of money. We financed our allies, and we had also difficulties in meeting the Budget. During the war we raised money by taxation, and in Pitt's last Budget the total amount raised was£42,000,000.£18,000,000 was raised by loan and£24,000,000 by taxation. I feel I might refer here to words uttered to me when I was sent by the Peace Conference to Berlin in March, 1919, by the late Herr von Bethmann Hollweg. His first wrords to me were words of congratulation to our Chancellor of the Exchequer that he had taxed the people during the War. We had a similar instance a hundred years previously, as I stated, when Mr. Pitt, in his last Budget, taxed the people during the war. After Waterloo distress arose, not from any derangement of domestic policy, but more or less similarly as we now find by a derangement in the general state of Europe. In 1816 the debt was reduced; in 1817 we had a deficit of£14,000,000, which was really a suspension of the Sinking Fund and is, in some ways, similar to the Budget we have before us at the present time. Again, in those years Funds rose, which eased the position for the Chancellor of the Exchequer and allowed him to borrow money cheaper. We then had Members in the House similar to the Leader of the Labour party (Mr. Clyncs) and the hon. Member for Govan (Mr. Neil Maclean), who are always anxious for a capital levy or for a reduction of interest, and the Chancellor of the Exchequer, in those days, in reply to questions which were put to him, declared that the country would lose more in credit and in resources of every kind than it would in
any manner gain by such an enormous breach of faith. These are very true-words. They are practically the same as have been used by our present Chancellor of the Exchequer. The "Times" has a practice of publishing extracts from their paper of 100 years previously. In its issue of last Friday it gave the following under the date Friday, 26th April, 1822:
House of Commons.
The petitioners expressed an opinion that the distress of which they complained was, in great degree, attributable to too sudden a contraction of the currency.
The petitioners expressed a conviction that it would be found impossible for the country to bear its burden unless those burdens should be reduced as low as possible.
Lord Nugent presented a petition from a very respectable body of his constituents. They looked to a reduction of taxation as the only means of relief.
That is practically what we have to-day. The only way is to get a reduction of taxation, without which we cannot possibly expect the trade of the country to exist. During the War money was practically no object. The only thing was to win the War. During the War we inaugurated an external debt which we had not in August, 1914. I am very pleased to hear from the Chancellor of the Exchequer that some of this external debt has been paid off. An internal debt among the citizens of a country will never ruin any country as long as taxation is fair. As regards expenditure, we all want economy. Economy in the strictest possible sense of the word does not simply mean spending less, but it means using the resources of the nation wisely so as to secure the greatest possible return. I am very anxious, as is the hon. Baronet the Member for Sheffield (Sir S. Roberts) that there should be some Committee set up by the Chancellor of the Exchequer with a view to going into further details which were not, perhaps, touched by the Geddes Committee. We must have this expenditure down. It is only by reduced expenditure that we can get taxation down. In the old days Mr. Gladstone had one Budget with which he found great difficulty. I refer to the 1860 Budget, when he took certain risks, and he said:
How can we keep ourselves going on a high tableland of expenditure? Enlarged productive power is the commanding aid of high finance.
These words are very true. With regard to revenue, plain common-sense teaches us
that when war has drained the economic resources of a country that country must give the most serious attention to the task of reconstructing its material wealth. What is wealth? There are three kinds of wealth. There is physical wealth—the physical wealth of the harvests. If we had two or three good harvests it would do better for Europe than any other means of stimulation. Then there is the-wealth of labour. We all know that only by hard work can we get the world back to its proper position. Also there is the wealth of credit. There is no country with better credit than we have. I remember that my hon. Friend the Member for Morpeth (Mr. Cairns) seemed to suggest that credit was a large application for shares, and he referred to the issue of the Anglo-Persian Oil shares. A. rise in stocks and shares is not credit. A large application such as the hon. Member referred to is not wealth. But what I feel will help the country as well as anything possibly can is the large amount of new issues recently made and the large amount of genuine capital subscribed. That will bring work to this country. In the first three months of this year£286,000,000 was subscribed on prospectuses, without counting Government issues. Since that date we have had the New Zealand loan of£5,000,000, of which£3,000,000 is to be spent in this country. That will help our trade. It is trade we want. It is through trade we shall get a reduction in the necessary taxation. The Prime Minister, when he spoke previously to going to Genoa, stated that international trade was working well in 1914. Yes, it was, but I do not think the right hon. Gentleman gave the actual reasons why it was working well. I contend it was working well because there was stability in one commodity, and that one commodity was gold. To-day we have not got that stability, and until we get it we will have variations of trade and variations of taxation affected by trade, as a matter of course.
Perhaps we do not realise how difficult this international trade is. We live on it, but yet we do not appreciate the enormous amount of the debts that have been raised by various countries in the world. In 1914 those actual debts were£9,000,000,000; in 1920 they were£53,000,000,000. All that must affect our trade and the taxation of this country. It must affect us because nations outside ourselves are not meeting their Budgets.
We are so interlaced with other countries that it is essential for us that other countries should balance their Budgets as we do. Take a country like Portugal. Portugal is only raising revenue sufficient to meet half her expenditure. Belgium is not meeting her expenditure. Austria and Germany, of course, are not; while India, which is our principal purchaser of goods, has a deficit of 34 crores in place of an estimated surplus of 21 lakhs. Taking the rupee at Is. 4d., it means a deficit in their last Budget of over£22,000,000, as compared with an estimated surplus of£140,000. Again, countries like the Argentine are not balancing their Budgets, and in the United States of America, which is so often spoken of here, the Budget for the year ending July, 1923, shows a deficit of 167,000,000 dollars. They gambled on Washington. They hoped that Washington would be successful, and, according to their statement, as I read it, if Washington were successful, they would probably balance their Budget. It must be realised that we as a country are, perhaps, the only country in the world which, to use a nautical expression, has gained its sea legs.
In the case of the Budget for the year 1921–22 it was a difficult matter, with the coal stoppage and so on, to make correct estimates, and I think the Chancellor of the Exchequer is to be congratulated on his nearness to his estimates. Last year he provided£113,000,000 for his Depreciation Fund, Sinking Fund, and War Stocks and Bonds tendered in payment of Death Duties and Excess Profits Duty. He is estimating for a decrease of£10,000,000, but I cannot help thinking that that estimate is very small. We all know what the bankers have said about trade, and the necessity for this reduction of taxation in order to stimulate trade, and we have to realise that nearly£400,000,000 for 1921–22 has been collected from the Income Tax payers. A reduction of 1s. should afford a great stimulus to trade. Indeed, I have only recently been told by an hon. Member that he is already anticipating giving orders, so that he may be in the forefront when trade does improve. We want to assist people like those ex-Service men referred to by the hon. Member who spoke last. If we want to assist the labouring classes and to do the maximum of good, it is not enough to
operate on the articles consumed by them; we should operate on the articles that will give them a maximum of employment, and I feel that this reduction of Income Tax will give them that maximum of employment which we all desire. I know that certain hon. Members think that the Chancellor should not have taken this risk of borrowing, but I think he has done quite rightly. I feel that in these times we all want courage, whether business men or the Chancellor of the Exchequer, so that we may get back to national prosperity.

Mr. A. M. SAMUEL: I should like just to touch upon one or two questions. Firstly, I want to refer to this inhuman 6s. in the£ Income Tax, which has proved so terrible a burden to the middle classes; and then, if I may, I will say a word upon the suspension, if it may be so called, of repayment out of revenue of the Sinking Funds. Before, however, leaving the question of this inhuman 6s. in the£—and I am glad the Chancellor of the Exchequer has seen his way to reduce it by 1s.—I should like to ask the Financial Secretary if he will explain what this 1s. reduction means in the case of those whose incomes are below the limit which enables them to have relief for the first few hundred pounds. At present they pay nothing on, I think, the exempted portion of income and then 3s. on the next portion and 6s. on the rest. Are we to understand that this 5s. is to be divided into 2s. 6d. and the balance at 5s.? I have no doubt that the Financial Secretary will be able, in due course, to explain exactly where the 1s. relief comes in in these taxable income calculations after the£225 allowance. If I know him well, I think he must be laughing up his sleeve at us who, as traders, have had control of the finances of our firms, if he thinks that we are passing this Budget as a sound Budget. It is not a sound Budget so far as the remissions are concerned. It is not justifiable on the figures to give the remissions. I welcome it, and shall support it, none the less. I do not call it a psychological Budget, as the hon. Member for Oxford (Mr. Marriott) calls it. I call it a tide-over Budget. Its only claim to being passed while we are in a state of transition from the trouble of the first two or three years following the War to normal conditions, is simply because it assists the middle classes to face the burdens of life without that terrible 6s.
in the£ Income Tax. When I come to think that 6s. in the£ to these people means that for four months of the year they are working for the Government, it almost reminds me of the corvée in Egypt.
The Budget's remission of taxes, however, is not justifiable on the figures. There is not a possible remission of 1s. or, indeed, of anything, as shown by what the revenue will bring in for 1922–23. It seems to me that we might paraphrase the expression used by Sir Fleetwood Wilson a good many years ago with regard to the Indian Budget, when he said it was a gamble in rain. This Budget is a gamble in the revenue of the year after next, and in what can be realised through the Disposals Board. I do not know what still remains of that widow's cruse of the Disposal Board, but we who have worked in the Ministry of Munitions have had some experience of it. In the previous Budget and this it was and is possible to include what would be realised through the Disposals Board, but one does not know how long that stream of realisations will be able to go on. The House, however, must have a great deal of faith if it thinks it will go on for any great length of time longer. I do not think it will, and, in any case, it has always been unsound to apply these realisations to current revenue. No financial jugglery in the form of Is., or even 2s. or 3s., off the Income Tax, will rehabilitate trade. British trade will rehabilitate itself by its own soundness; it will not be helped to prosperity by 1s. or 2s. off the Income Tax. My hon. Friend the Member for Limehouse (Sir W. Pearce) seems to think that this 1s. relief will bring about a recrudescence of trade. But what does that mean? Let us bring it down to a concrete instance. There are many firms with a couple of thousand men which make£20,000 a year. Suppose you get this 1s. in the£ off, it will put£1,000 more into the pockets of the firm, but does the Chancellor of the Exchequer really think that that 1s. in the£, remitted to them and giving them£1,000 more profit, is going to help them in the slightest degree to extend their business? I do not believe it for a moment. It is too small to help. But if even the money is saved by an investor who receives by this exemption of 1s.£1,000 a year more that he can invest, I very much doubt whether he will
spend that money in a form which can help industry. He may spend it on pleasure. Most people who get this shilling off will, I think, spend it in some restored comfort. I am one of those hard, stony economists who do not believe that unreproductive expenditure in industry is of much use to the nation in the long run. Suppose a man is lucky enough to save and invest£1,000 on this remission of a shilling, what good is this income on£1,000 to him when taxation is 5s. in the£ and there is Super-tax, we will say, and then other burdens on his savings at death, which have been referred to by my right hon. Friend the Member for Chelmsford (Mr. Pretyman). The£1,000 will bring him in£50 a year. Take 5s. off for Income Tax, and perhaps there is Super-tax. That brings it down to£30 or£40. Men nowadays will not save if they have to grind and screw to save£1,000 and only get at the end of the year£30 or£40. They will say, "Let us blue the£1,000 now and enjoy£1,000 rather than save up and get£30." It is not worth while denying one's self for£30 only. There is a fallacy going through the minds of the people that a reduction of 1s. is going to do much good to industry or to induce men to save money to put it in investments to assist industry. They will do no such thing. The return in income is not enough to induce them to save. They will spend their savings and enjoy them while taxation now and at death is so high.
The suspension of payment of the Sinking Fund out of revenue I do not like at all. I do not like the suspension of any repayment of debt. The best way to make a fortune is to get out of debt. No man or country was ever ruined by repaying debts. We are now face to face with the same discussion about the Sinking Fund which sprang up at the time of Pitt. It is not a later and Napoleonic period discussion, I believe, although my right hon. Friend the Member for the City (Sir F. Banbury) referred to it as a question which sprang up after the Battle of Waterloo. I think it was earlier than that. Illustrious speakers on economics, Ricardo, Baring, Grenfell and others, pointed out the fallacy of borrowing money to repay debt. It was merely taking money out of one pocket and putting it into another and losing something in the meantime in the costs of administration. I do not
like the non-performance of contracts about Sinking Fund payments out of revenue. They ought to be paid out of revenue, but in this case the hon. Member for Harrow (Mr. Mosley) is wrong in saying we are adding to our debt. As a matter of fact, if we now borrow from Peter to pay Paul we shall not add to our debt but, curiously, in suspending this Sinking Fund in the particular cases of the Conversion 3½ per cent. Loan, the 4 per cent. Funding Loan and the Victory Bonds, which were the three loans referred to by the Chancellor of the Exchequer, if he leaves the money in those loans and does not pay them off he pays something like 3½ to 4 per cent., while if he borrows the money to pay them off he will be now able to borrow by Treasury Bills and very short-dated Bonds at 2½ or 3 per cent., which of course will put a saving into the Exchequer. He will thus be able to borrow and pay off at a less rate than he is paying for the money if left unpaid off. I think the Financial Secretary will agree that that is a fair statement of what is going on at present rates of money. There are some who think money will get dearer when trade revives. I do not attach as much importance to that argument as some do. There is a large body of people who have lots of money coming forward for investments. I believe, notwithstanding the fact that trade when it revives will require more capital, that the demand by investors, and by the banks on behalf of investors, for Treasury Bills and for investments will keep the capital value of those investments up so high as to make money much cheaper than it would have been in similar circumstances before the War. I therefore think on the whole we are not likely to have money much dearer even if trade, as I hope, revives, and the result will be that notwithstanding that we have committed what I call an economic sin in not paying off our Sinking Fund out of revenue, the paradox will spring up that we have temporarily financially benefited the Treasury by so doing.
The remissions of this Budget, although I support them in the interest of the middle-class taxpayer with his terrible burden of 6s., and in the interest of the working man's wife, are utterly unjustifiable on the figures. The only thing to
justify the remissions would have been a larger revenue or a smaller expenditure and repayments out of revenue. The Budget, therefore, is not a sound Budget. It is due to one's self-respect to put that on record. The way, with present revenue, to justify such a remission of taxation as we have been promised is to cut down expenditure. Where it can be cut down is shown in this Blue Paper under the heading of Supply Services. Here we have a gross total of£546,000,000. I take away from it, of course, the Post Office services, and Customs and Excise and Inland Revenue Departments, which bring their money back again, and, consequently, refund the outlay, and really are not expenditure. These supply services are the key to the whole position. The Government has got to make up its mind in the next few months to withstand continual demands for public assistance on the part of a Socialistic and Communistic Labour party. It has to cut down expenditure and be prepared to go to the country and say, "We will stand or fall by cutting down expenditure." I am certain if the Government makes up its mind to cut down expenditure, after the lesson the country has seen in the last two years of what high expenditure means in Socialistic and Communistic experiments, with the resultant high taxation, the country will support them against any outcry made by those who say we ought to go on with paralysingly costly social reform of the kind which to my mind is nothing other than political bribery.

Mr. RAWLINSON: I will not follow the last speaker in his able attack upon the Budget. I rather take the brighter side and congratulate the Chancellor of the Exchequer upon this point at all events, that he has not yielded to popular clamour in such a matter as the reduction of the Entertainments Duty. That, after all, is a very great point. One is apprehensive in a Budget of this kind as to whether or not the temptation to play up to public feeling is too great. The lack of imagination in inventing new taxes I always think is very much gainst the Treasury. The Entertainments Duty was a new tax and a good tax, and I am glad it has not been tampered with. I should imagine there are certain ways of extending it. Of course, the benefit of it is that it is purely on a luxury. A person who can afford to go to an entertainment can quite well afford to pay tax, or it will
do no harm if he stays away. There are many other luxuries to which the principle can be applied in the same way. There are such matters as the large amount of travelling which takes place on Sunday—purely pleasure traffic—which could very well be brought within the range of the revenue authorities. Again, there are advertisements, which are subject to taxation in other countries and which are here certainly a proper subject of taxation, and I should imagine a public nuisance in many cases, more especially when they take the form of flickering electric lights. These are points to which the Treasury might well turn their minds.
I congratulate the Chancellor of the Exchequer upon the fact that he is determined to find out some means of dealing with people who evade Income Tax at the present time. Income Tax, bad or good, should be paid by everybody with taxable income. At one end, we have the case which was brought before the Committee to-night of somebody who had Apparently done well as a workman, but had never paid his Income Tax. The hon. Member who mentioned the case said that he had persuaded the Government not to take any steps to recover the money. Every effort ought to be made to see that people who are earning a taxable income pay at the time. The mere fact that their case is taken up by an hon. Member who has influence with the Government ought not to alter the case. It reminds me of what occurred in connection with my own Sessions. A lady juror could not attend. There were very good reasons for her non-attendance, but she wrote to my clerk saying: "Tell Mr. Recorder that he cannot possibly report me because he is a personal friend of my husband." That does not make things much easier for one dealing with these matters. I do not want the idea to get abroad that a person need not pay Income Tax because there may be a powerful member of the Labour party, or any other party, who can use influence with the Government.
At the other end of the scale there are very large evasions of Income Tax. There used to be a story, which I believe was absolutely untrue, of a certain gentleman assigning practically the whole of his very large fortune to his sons, and the sons very kindly made him a compassionate allowance to live upon in order to
eke out his remaining days. They granted him£40,000 a year which, being a gratuitous sum, was not liable to Income Tax. I do not say that that actually occurred, but it is a thing that might occur. I should have thought that by now a tax could have been levied upon all allowances, certainly on£1,000 a year. Anything which the Treasury can do towards stopping the evasion of Income Tax ought to be done. I know that many people spend large portions of their life in advising people upon methods by which they can drive a coach and four through the Income Tax Act, and they do it with considerable success. It is right that they should do that, and on the other hand the Treasury ought to have equally able people on their side to prevent these evasions from occurring.
There was applause when the Chancellor of the Exchequer said that we intend to pay the whole of our interest to America, without any sort of cavil. I cannot see why that should be any subject for boasting. The bulk of our debt to America at the present time represents money borrowed, not for our own purposes, but handed over direct to our Allies, and it was borrowed at the time when America was in the War. Before the War America lent us money on security, which has been mostly repaid.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young): The hon. and learned Member's way of putting it is not quite correct. I should like to put it in this way. We were borrowing from the United States, and at the same time we were lending independently to our Allies. If we had not had to lend to our Allies we should not have had to borrow from the United States, but there is no necessary relation between the two transactions.

9.0 p.m.

Mr. RAWLINSON: The amounts coincide. The amount that we borrowed from America is the amount that we lent, contemporaneously, to our Allies, which is the same thing, though I accept the correction from the Financial Secretary to the Treasury. Previous to America entering the War she would only lend money to us on security. I believe that was without precedent between civilised countries. We lent money to Japan during the Russo-Japanese War without security, and one neutral country has lent to another neutral country in the past
without security. When America came into the War, it was only because we were financing the War that we had to borrow money from America, and I cannot understand why America should not be asked to bear her fair share of the burden in financing the Allies, as we have done. Without any loss of dignity to this country we might ask America to do that. We cannot help bearing in mind that the American view in connection with the Treaty of Versailles had a considerable effect in preventing the carrying out of the policy, of which some people made a great deal at the last General Election in this country, that this Government was returned to carry out This Government was returned for the purpose of making Germany pay the cost of the War. It was largely owing to the influence of America that that policy was not carried out in its entirety. Somebody ought to say, once and for all, that in this matter America does not seem to be bearing her fair share of the burden of the War.
The reduction of 1s. in the Income Tax is very welcome, whether we spend it in riotous living or however we spend it. The Corporation Profits Tax, which does not hit mc at all personally, is probably the most vicious form of Income Tax at the present time. It is the most unscientific form of taxation. It was brought in in a great hurry, when the Luxury Tax failed to be carried through, and was more or less brought in in substitution for that tax. It is a tax upon the profits of any incorporated company. The profits are gross profits, and no deduction is allowed for interest on permanent mortgages or permanent loans. There are two evils involved in this. It is an Income Tax upon everybody who holds ordinary shares in a company, and is not created like the Income Tax. By not allowing any deduction to be made from the gross profits in respect of interest on permanent mortgages or permanent loans you have this absurd position, which is revealed in a company with which I am connected, although I have no shares in it. It is a case where school buildings were put up on borrowed money. The old members of the school lent the money willingly. Every year that school is run, not at a profit but at a slight loss, which is made up by
the old members of the school, who are very willing to do it. The absurdity this year is that although there has been a slight loss upon the trading of the school during the year we have to pay£500 Corporation Tax, because we were not allowed to deduct the interest upon our original borrowed money, which is really the rent we pay for the school houses, the college, and the land upon which it stands.
But that is not all. This Corporation Profits Tax is applied to those companies which by law are not entitled to make any profit at all. I have brought the matter forward constantly by question and answer. There is a very large number of philanthropic companies in England which were asked by the Government for the time being to incorporate themselves, and they did so, as they got a certain convenience from it. Profits cannot be made out of these institutions. This applies to a very large number of ladies' colleges, including, I think I am right in saying, Girton in Cambridge, and a large number in Oxford, and to many high schools throughout the land. There is a large number of important public schools, and, though by law they cannot make a profit as philanthropic institutions, yet they have to pay this Corporation Profits Tax. It is a very severe tax on educational establishments which it is for the advantage of the country to keep going, because if they were shut up the State would have to build schools to replace them.
I would press the Government to deal with this matter as soon as they can. The whole policy of the Government has been to encourage limited companies. To begin with, they get a very large sum paid in stamps on the formation of the company and the issue of the shares, and private trading companies have been encouraged by the Government, and this tax is a distinct block in the way of private trading companies. Some time ago friends of mine who were partners in a printing company were thinking of turning it into a limited liability company, but in view of this Corporation Tax I advised them to do nothing of the kind. They were living upon loans, and they would have to pay the extra Income Tax not only upon their profits but upon borrowed capital as well. Therefore they remained in a private partnership. In the long run the Government have not
gained, because they would have got a lump sum down by way of capital if the company had been turned into a limited company. I would ask the Government to give their attention to the Corporation Profits Tax. It will not give them so much popularity as a reduction of 1s. in the Income Tax, but it is a matter which should be dealt with without delay.

Lieut.-Colonel GUINNESS: I am very glad that the hon. Member for Cambridge University (Mr. Rawlinson) has pointed out the iniquitous incidence of the Corporation Tax. I will not follow the matter further, except to refer to another class of philanthropic bodies who are very hard hit, bodies like the Lister Institute, which, because they are technically companies, though they are not allowed to distribute a penny of their money in dividends, are yet deprived of money which would go for research on behalf of the community, and have to meet this liability that falls on all corporations. I trust that the Financial Secretary will give favourable consideration to the claims of these bodies, which are doing public work of great importance, and that they should be given at least the benefit which is extended to statutory companies which do not exist for any philanthropic work.
Coming to the Budget generally, in spite of the few criticisms that have been heard, the Committee and the country generally will, I think, recognise that, in the deplorable condition of industry and employment, the Chancellor of the Exchequer was justified in departing from strict canons of financial orthodoxy and relieving the taxpayer even by the extreme resource of suspending the Sinking Fund. My own feeling is that we have done far too much in the way of paying off debt since the War. If we had not laid aside these enormous sums, over£100,000,000 a year, for the repayment of debt, I believe that our present difficulties would have been considerably less. Our first object should be to bring industry into its stride. When that happens and wealth begins again to increase, the burden of the Debt which now is so crushing could be borne with ease. The postponement of the payment of debt after the first year or two took place in the case of the Napoleonic War, and was then fully justified, because the repayment of debt, which at first would
be an enormous proportion of the national wealth, was, when it was finally taken in hand, so small a proportion that it was not a serious burden on industry. I am glad that the Government have at last decided to apply the teaching of experience to this matter.
A great blemish on the Budget is that of inadequate recognition which has been given to the claims of the indirect taxpayer. Direct taxation is graduated to vary in proportion to income. But indirect taxation is far more arbitrary in its operation, and can only be made to vary in proportion to income if an individual foregoes some of the necessities or little luxuries to which he was formerly accustomed. We know that commodity prices have come down, and that, in view of that, deflation has in many cases left real wages very nearly as high as they were when industrial wages were at the top of their curve just after the War. But if that be so, the real taxation of the working classes has actually been increased steadily during the last year, unless they cut down their standard of living, a bigger proportion of their earnings now goes on indirect taxation. Take the case of the agricultural labourer. His wages have dropped by at least one-third in comparison with what they were a few months ago, and if he is not to pay an undue proportion of indirect taxation that too must be reduced. I do not suggest that it is possible for the Chancellor of the Exchequer to relieve this class by the full proportion which the fall in their wages requires, but he should do what he can. On last year's basis of taxation, applied to this year, customs and excise stood at£278,000,000. On this very large sum the Chancellor of the Exchequer is only making a remission of£5,000,000. That is to say, about one-fifty-fifth is being remitted from this indirect taxation to meet a wage fall of not one-fifty-fifth, but of one-third. I believe a further reduction would be practicable on the figures disclosed this afternoon, and without any risk of a deficit.
The Beer and Tobacco Duties have passed the point of diminishing returns. We do not know what revenue the Chancellor of the Exchequer expects to receive from those duties, but it is well known that since wages have had their enormous drop the consumption of beer has decreased in a very sudden way, and
I understand that the present tax on tobacco is also having a strong deterrent effect on consumption. The same thing has happened in our recent Budgets. In 1920 the late Chancellor of the Exchequer proposed such a duty on sparkling wine as practically to extinguish their import and consumption. When events proved the justice of the innumerable prophecies the Chancellor of the Exchequer had the wisdom last year to reverse his decision and take off the duty. In the same way in 1920 the late Chancellor of the Exchequer reduced the Tea Duty by 2d. The previous year the duty had brought in£16,054,000. The result of the reduction by 2d. a lb. on 90 per cent, of our imports was that the revenue grew to£17,750,000. If the Chancellor had the courage to apply the same principle to the Beer and Tobacco Duties, where the yields in the last few months have been vastly decreased, he would get the same result. If he is nervous about it he could insure against loss in the way which I am going to suggest, and he could readjust matters in the next Budget if the decrease of tax did not stimulate consumption in the way that I expect.
I suggest that he should sell those speculative commercial investments which have been acquired during the last ten years. I do not suggest that the Suez Canal shares should be sold, because they give control over a vital communication of the Empire. But there is no such justification for the more recent purchases. I will mention only one. By our sale of our holdings in the Anglo-Persian Oil Company we could raise about£20,000,000. It may have been right to have acquired control of this company in the development stage, when the backing of the Government was necessary for negotiation with the Persian Government, and for making necessary arrangements with the Navy and so forth; but that stage has long passed, the company is in a strong position, and in private hands it will develop just as quickly and sell oil at exactly the same price as it does now when controlled by the Government. In war it is not the ownership of shares in a company, but the possession of sea power, which secures our supplies from Persia or any other foreign field, and if we had lost our sea power, or ever lose it, no amount of financial control in war would enable us to retain these foreign
supplies of oil. Naturally I do not want to see the control of this company go from British hands. When this matter was raised before it was suggested that the Standard Oil Company would probably benefit if the Government were to sell their shares. I believe that that could be quite easily avoided. The Government on selling their holdings have merely to allocate stock to British holders only and to spread their allotments over so large a number as to make control by foreign interests virtually impossible. The Government holds 4,000,000 ordinary shares of a value of about£4 15s. each, and they also hold debenture and preference shares. On a conservative estimate we could get£20,000,000 by selling these shares.
There would be ample security against any possible deficiency if we were to take the risk of reducing indirect taxation to a less prohibitive scale with a view of lightening the burden of a class which is now earning small incomes, and, at the same time, we might hope to increase consumption. A better insurance against next year is to devote more energy to economy. The Chancellor of the Exchequer referred with some indignation to the small credit which the Government have so far received for their efforts to cut down expenditure. I cannot help feeling, however, that they are themselves responsible for their troubles in this respect. Until the hard times came they were following the primrose path of easy expenditure, and it is not surprising that the country has been rather slow to recognise the Government's tardy efforts to cut down expenditure. I hope the Government will not be discouraged in their well doing, for I am sure that if they will persist and not be content to leave the cutting down where it has been left by the Geddes Report, but will go on along the thorny path, they will in the end reap the greatest reward for our national finance.

Mr. W. GREENWOOD: About two years ago I had the pleasure of addressing the House for the first time, and then it was with very great regret, after having listened to the introduction of a Budget which, to my mind, was destined to be the forerunner of a great deal of unemployment. To-night I feel very differently from what I did on that occasion. I have had great pleasure in listening to the outline of a Budget
which, I think, will have just the opposite effect on employment. I believe the Budget of to-day will act as a reviver of our trade and industry and will be a tonic which has been long overdue. To introduce a Budget such as this requires the special characteristic of courage, and I must congratulate the Chancellor of the. Exchequer that he has shown that characteristic. I do not think I shall be drawing too much on my imagination if I include in my congratulations the Financial Secretary to the Treasury, who, I am sure, must have been of very great assistance to the Chancellor of the Exchequer in the preparation of the Budget.
I listened very carefully to the two criticisms of the Budget, first from the right hon. Member for Paisley (Mr. Asquith), and secondly from the right hon. Member for Platting (Mr. Clynes). In the first case, the soundness of the Budget was palpable. We were told by the right hon. Gentleman the Member for Paisley (Mr. Asquith) that it was such a sound canon of finance that there should be no remission of taxation unless there was a surplus that it was becoming quite a commonplace. I venture to say it is possible that a people may accept through generations certain axioms of policy with regard to finance which yet may not be altogether proved to be correct or sound views. I should like to read to the Committee the views of a man who lived a long time ago—this was in 1851. The man was Mr. Milner Gibson, and it is with regard to the criticism that this Budget is an unsound one that his remarks may be found to be appropriate. He said:
And now I trust we are going to reap the fruits of that reduction of the expenditure and increase of income arising from a more sound commercial and financial policy, in the removal of some of those taxes which oppress the industry and prevent the employment of the capital of the country. I will say this, that I do not advocate the dealing with taxation entirely upon what I may he permitted to call the narrow grounds of whether there is a surplus or a deficiency. It may he said that it is more easy to make an experiment in our finance when we have a surplus than at a time when the income augments the expenditure. But the late Sir Robert Pool set an example which, I think, the present Government would do well to follow, of not basing our financial changes upon the mere fact of whether there is a surplus of money in the Exchequer, but upon a well-considered scheme of financial policy, to repeal those taxes that are the most oppressive to the industry of the country, and which in the greatest degree
contract the enjoyments of the people. I want to see our taxation based upon something like well-considered principles, and even if there should be a deficit at any particular time, I see no reason why a Ministry should not persevere in endeavouring to carry out those financial arrangements which would enable them to remove oppressive taxes without injury to the revenue, and with great benefit to the people. The experiments which Sir Robert Peel made upon taxation are pregnant with valuable lessons to statesmen. I wish them to profit by those lessons, to see that you may reduce a tax without losing revenue.
The hon. Member who has just sat down gave us a very clear illustration of where the law of diminishing returns has applied with regard to one or two taxes. I think he would agree with me that it would apply to very many more taxes which are imposed at the present time. The right hon. Member for Paisley said it was unsound in finance and that the Chancellor of the Exchequer was entering on a great task. It appears to me that since 1914 this country has been engaged all the time in taking very grave and great risks. You are bound to take risks in time of peace just as we were bound to take them in time of war. I remember a good many years ago that a man fell from a scaffold. He hurt himself very badly, so badly that he was becoming very black in the face. I knew nothing about medicine nor injured necks, but it looked to me that something required to be done and to be done quickly, so I got hold of his neck and pulled it very hard. Afterward his face began to assume a more normal expression, and the doctor said I had done just the right thing. I took the risk, and I am glad to see that the Chancellor of the Exchequer is doing the same thing with regard to this system of taxation.
The other criticism was from the right hon. Member for Platting (Mr. Clynes). His criticism was somewhat in the opposite direction, and he suggested that the financial policy of the Chancellor of the Exchequer was rather too sound. His suggestion would rather have been to make a levy on capital. He would raise the money in that way. I can never quite understand why people who talk about taking money from other people who have saved and earned it always call it "raising." It would be much better to call it by its proper name of "taking," because that is really what it is. At any rate, I imagine it would be much more unsound finance than any-
thing that has been suggested by the Government in this Budget. I am very glad that the Chancellor of the Exchequer, along with his advisers, has come to the opinion that the policy of excessive deflation pursued by the Government in the last two years has proved to be wrong and that they have now decided that the best thing is to take the middle view. They have already decided to do that by refraining from paying off, for the next year at any rate, any part of the National Debt. I do not regret that for one moment. It is a very sound policy indeed, and those who claim that we in this country are not doing as much as we ought to do should at any rate remember what has been done already. Surely if it is very good business and sound policy to pay off a fair amount of debt, as we have done at times when our business and industry have been prosperous, it is only sound reasoning to say that we ought to delay that payment when our industries are m the bad position they are to-day.
I am sorry the Chancellor of the Exchequer has not seen his way to make an end of the Corporation Profits Tax. That tax is almost as bad in its incidence and iniquity as the Excess Profits Duty was. I hope before very long that the right hon. Gentleman will see his way to do away with it, I agree that the soundest policy is the Income Tax. I have always said, and I say again to-night, that to tax people on the profits they make is quite a sound policy. As has been explained by a previous speaker, the Corporation Profits Tax does not do that, and is not fair in any sense in its incidence. The Chancellor of the Exchequer referred to the exchange with America, and I rather gathered that he wished to impress us with the fact that, owing to the exchange being now 4 dollars 40 cents, as against 3 dollars 20 cents 18 months ago, we were able to do business much better with America. If that were so it would imply that those countries on the Continent of Europe which had adopted a different policy to ours would not be in so good a position. It is, however, rather singular in regard to the cotton trade that our purchases from America in 1921–22 show that the takings of cotton so far as this country was concerned were only 57 per cent, of what they were in 1913–1914. Those on the Continent of
Europe were 67 per cent., the United States of America 97 per cent., and in regard to Japan they were 212 per cent. It will show you must not infer, because you have impoverished yourself by your policy of deflation, that you have put yourself in a better position for doing business than other countries of the world. They are doing just as well and just as much as we are. We have kept up our credit, and I am glad we have done so. No one more than I likes to see this old country standing, as it always has stood, on a very high pinnacle, but I am afraid we have overrated the importance of that particular point. I believe that in the policy the Chancellor of the Exchequer has adopted in his Budget, he is going perhaps as far as he is justified under all the circumstances of the case. I congratulate him on giving what will be a real help and filip to industry, and I hope very sincerely that it will tend to increase our employment.

Mr. REMER: I do not think the Chancellor of the Exchequer can complain of the chorus of congratulations which have poured on him from almost every portion of the Committee. When I come to analyse the criticisms which have been made—which were voiced in the first instance by the right hon. Member for Paisley, and those of the same kind which were made by the right hon. Member for the City of London (Sir F. Banbury)— that he was not this year paying anything off the National Debt, I cannot follow the argument which those two right hon. Gentlemen brought forward. In my opinion, and I have expressed it on previous Budgets, earlier Chancellors of the Exchequer have attempted to pay off far too much of the National Debt and more than the country could stand. Several reasons, sound in finance, could be advanced why the Government should not this year attempt to pay anything off the National Debt, but should be content with merely balancing the Budget. First, there is the statement made by the Chancellor of the Exchequer in his Budget speech, that in the last two years we have actually paid off£323,000,000 of the National Debt. If we pay off nothing this year we shall be adopting a measure of sound national finance. There are other reasons. There is the fact mentioned in the Budget speech that there are arrears of Excess Profits Duty which can be regarded as a sort of national
reserve amounting to nearly£300,000,000, and we know that there are also large arrears of Income Tax, amounting to£100,000,000. These two added together seem to me to provide something in the nature of a national reserve amounting to£400,000,000. That is an argument why we should not this year attempt to pay off anything of the National Debt. There is a large amount of Allied debt upon which we are not receiving any payment either for interest or for capital, whereas we ourselves are allowing payments in regard to our external debt.
There is also the very material point that trade is starting to improve. There is a distinct improvement in the state of commerce, and the reduction in the Income Tax will just give the necessary impetus to trade to start not what is called a boom, but that steady flow of trade which is necessary for the full employment of the people of the country. The right hon. Gentleman the Member for Platting (Mr. Clynes) told us what the Labour party would do were they to come into power, and he indicated that if the Labour party plan were adopted, it would work speedily in dealing with the finances of the country. If I read his plan correctly, it would work very speedily indeed, because it would very quickly end the commerce of the country altogether. The most amusing criticism to which we have listened in this Debate came from the hon. Member for Harrow (Mr. Mosley). If I judge his speech aright, he is looking forward to that time when the Noble Lord the Member for Hitchin (Lord K. Cecil) takes his place on the Treasury Bench and appoints the hon. Member for Harrow Chancellor of the Exchequer. In those days, when we have honest politicians, the hon. Member will doubtless safeguard the Budget secrets in such a way that no newspaper, not even the "Daily News" or the "Daily Chronicle," will be able to secure them, One surprising thing about this Debate which must be commented upon is the entire absence of Members of the Anti-Waste party from those who have intervened. After the numerous letters and clippings out of the "Daily Mail" and the "Times" which Members of Parliament have been receiving, I think we ought to have had an explanation from some Member of that party as to their attitude on this particular problem. We ought to have had some explanation
of why every morning we have been treated to charges of extravagance in expenditure which cannot be justified when we are told by the Chancellor of the Exchequer to-day that in this Budget he has actually reduced expenditure to a sum of£218,000,000. I have received something like 500 or 600 letters to every one of which I have sent a reply. I am told very few Members of the House have taken the opportunity of replying to those letters, but I have replied to mine, and I should like to read one passage out of the reply which I have sent to every one of my constituents who forwarded me this newspaper paragraph. I have written:
I should like to make it quite clear that I am in complete disagreement with the Northcliffe Press. Their papers are stuffed full of dishonest misrepresentations and wicked lies. In every issue of their papers I could point out to you, both in the 'Daily Mail' and the 'Times,' statements which are contrary to the facts.

Lieut. - Commander KENWORTHY: What has that got to do with the Debate?

Mr. REMER: I am mentioning this because I have been asked by the "Times" and the "Daily Mail" to take some action with regard to this petition, which is, I want to say, quite dishonest and quite inaccurate, and I feel we are entitled to some explanation from those Members of the Anti-Waste party who may be in the House at the present moment. They should state their facts on the Floor of the House instead of using newspapers for purposes of propaganda. I feel very deeply that Members of the House of Commons should be subjected morning after morning to statements in the Press which are most abominable and of a serious kind, and I do say that the place to make such statements is on the Floor of the House instead of in the columns of certain newspapers. There is only one point in regard to which I am disappointed in the Budget. The Chancellor of the Exchequer said there was depression in trade and unemployment, and he referred to the privations of the middle classes, but he did not announce, as I had hoped he would, that he was going to put a tax on that£100,000,000 of imported manufactured goods which come in from foreign countries. He did not announce that there were many of those articles in regard to which, under the Safeguarding of Industries Act, impartial tribunals
have decided that a good case has been made out. I had hoped that in the Budget Statement we should have seen an extension of the list to articles such as motor-cars, clocks, and musical instruments, which have done so much to provide Income Tax and employment and which have been so beneficial to our people as a whole. I had hoped that list would have been very materially extended, and would have enabled the people of this country to restore their trade much quicker than they would be able to do by any other method.

Mr. KILEY: Put down an Amendment.

Mr. REMER: I should like to add my voice to those of Members who have already pleaded with the Chancellor of the Exchequer and expressed their willingness to give him the full weight of their support in any means he can devise to further cut down the expenditure of this country and to maintain economy. It is necessary for all Members of the House who think in that way to give their support to the Chancellor in this respect, and I assure the right hon. Gentleman that any measure he takes in that direction will have the support of all Members who hold those particular views.

Sir HARRY HOPE: The concessions which the Chancellor is giving to the agricultural industry will be welcomed by all farmers and landowners throughout the country and their appreciation of the Chancellor's action will not be solely on account of the concessions themselves, but also because they will recognise that these concessions mean that the Government realise the hard circumstances in which the industry has been placed. Before the War, occupiers of land paid Income Tax upon one-third of their rent. During the War that assessment was raised to the amount of the rent, and then in 1918 the assessment was again raised to double the rent. In the change which has been made to-day I think the Chancellor of the Exchequer is only recognising the difficult state of affairs which exists. No doubt the profits of agriculture were high during the War, but since then a complete change has come about, and now the profits of farmers are much nearer what they were before the War, namely, one-third of the rent, than double the rent. The Chancellor of the Exchequer
did not say that farmers were still to have the option of coming under Schedule D. I only hope the Financial Secretary to the Treasury will be able to announce that that option, which occupiers of land have always had, will still be open to them, and that if they prefer to pay Income Tax under Schedule D they will be allowed to do so. I do not think the concession which the Chancellor of the Exchequer has announced to-day will result in much financial loss to the country. The right hon. Gentleman said that in a few years it might amount to 2½ million pounds, but I know very well that certainly in Scotland there are many farmers who, instead of showing their books, will prefer to pay upon the rent, even if they have not made that amount of profit. That arises because the farmers do not want to show their books. There is a natural reticence against divulging what they are doing, and I am quite sure that in very many cases, where profit has not been earned equivalent to the rent, the farmers would rather pay Income Tax on that sum.
In the estimate of figures which is before us to-day, I see the money to be spent on the Road Fund is increased. There is no burden which presses harder on our country districts than the enormous cost of maintenance of country roads. Every year increased damage is being done to our roads by traffic from outside the country areas, and yet the residents in those country areas have got to bear the expense. I hope this Road Fund may be kept up to such a height as to compensate the ratepayers for the extra damage which this new motor traffic is doing to our roads. I think it is only fair to lay down the general principle that the people who use the roads and cause the damage ought to pay an equivalent sum for it. Criticism has been made to the effect that this Budget is an unsound Budget, but I think at a time like this it is essential to keep the Income Tax as low as possible. I think that enormous Income Tax of 6s. in the£ is a very great deterrent to any man investing capital in industrial concerns, and therefore, if the Income Tax is reduced, it is a good thing. Then again, in regard to 4d. in the pound off tea, I am sure the women voters of this country, who bulk so largely on our electoral roll, will welcome this change. Altogether I very heartily support this
Budget, and think the Chancellor of the Exchequer is to be heartily congratulated upon it.

Sir J. D. REES: It was my hope, if not altogether my expectation, that when the Chancellor of the Exchequer had made his statement he would be hailed as the statesman who had destroyed the Departments, reduced the Income Tax, and diminished the duty upon beer, but the Departments have as many heads as the Hydra, and it takes someone of super-herculean strength to encompass their destruction The Chancellor of the Exchequer has, I think, done all that a Chancellor may for, the present, but I confess I hope his efforts in that direction are only an instalment and that he will not lay aside his club until he has reduced the dragon's heads by a large number. As to the Income Tax, he has reduced it, and he has taken 4d. off tea, if he has not diminished the beer duty. I do not impute it to him for doing that, that he has shown any improper preference, as I should think it, for the teetotaller as against the other interests, because 4d. off a lb. of tea is a very sensible reduction, whereas diluted with 36 gallons of beer it would be a positively negligible quantity.
The right hon. Gentleman has done with the surplus at his disposal the very best he possibly could, and I for my part congratulate him heartily in that, having a small surplus to dispose of, instead of attempting to palter with the subject in giving 2d. to tea and 2d. to sugar—and tea and sugar are intimately connected, although we do not all take them together —he did the right thing and made such a reduction in one article of universal consumption as is really of sufficient magnitude to be distributed over the price put on the article by those who distribute it as shopkeepers amongst the public. I was in the Committee when the right hon. Member for Paisley (Mr. Asquith), who criticises very readily, was Chancellor of the Exchequer and took one penny off tea, and nobody thanked him. Tea is made up in quarter-pounds, worth so many pennies, and you cannot spread a reduction of a penny in such a manner as to be felt over a quarter of a pound. Then mark the difference. The present Leader of the House, when he was Chancellor of the Exchequer, took off 2d. Now 2d. was an amount you could make felt
even upon a quarter of a pound of tea, and now we have another Chancellor who, disregarding the penny of the right hon. Member for Paisley, and improving upon the 2d. of the right hon. Gentleman, the Leader of the House, has made it 4d., for which not only the tea producer and the tea distributor, but also that far more important individual the tea consumer, may, whenever he sips his tea, thank the Chancellor of the Exchequer, and the Government of which he is a member.
The right hon. Member for Paisley laid it down as a canon of taxation that you must not remit taxation unless you do it out of an excess of revenue, and he accused the Chancellor of the Exchequer of not taking long views. I am heartily glad the Chancellor of the Exchequer did not take long views, seeing that a generation lasts, I think, for about 25 years, and that we have for a decade, or for the greater part of it, borne the burden of war and its aftermath. Is it not time that this generation should have a little relief, and that something should be left to the next-generation to meet—they who are going to be the heirs of all that we have preserved for them. I heartily congratulate the Chancellor of the Exchequer on not having taken a view so long that it would overlook the whole of the generation to which he belongs. I think it becomes him to have regard to the empty pockets of the suffering people of his own day and generation, and I would point out that if larger reductions in expenditure were required—as I think they are with all my heart—it was hon. Gentlemen who sit behind the right hon. Member for Paisley and the right hon. Member for Peebles (Sir D. Maclean) who protested against the reductions of the Geddes Report, and succeeded in destroying recommendations which, had they been accepted in their entirety, would have allowed for the most magnificent reductions in taxation.
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Then the right hon. Member for Platting (Mr. Clynes) spoke, it seemed to me, in a most ungrateful vein. He had no regard for what was done for the agricultural or the urban interests. I speak for the urban interests, and I feel for the agricultural, and I believe the Chancellor of the Exchequer did his best for both. The right hon. Member for Platting said that if his party had the financial control of the country, they could right everything. I thank my stars they have not got it
Always their finance consists in taking everything off the defences of the country, and piling all the results on to social reform. It was owing to that method of finance that this country and Europe became involved in war. The Prussians would never have challenged the world if they had thought we would have taken a hand. It was because we were reduced to so small an army that they thought we were a negligible quantity, that we are saddled with the loss of a million lives and a debt of£8,000,000,000. I do believe that it will be absolutely impossible for this country to carry on with an expenditure even to the amount which is provided by the Chancellor of the Exchequer. It will not be possible to go on with Budgets of£800,000,000 and£900,000,000, and, although I am supporting this with all my heart, and congratulating the right hon. Gentleman, believing he has done all that a man could under the difficult circumstances, I hope he will not be satisfied until he has laid a train for very far greater reductions in expenditure than any he has been able to accomplish to-day. Of course, it should be realised, I think, especially when criticism comes from the opposite Benches, that although the War may have been the chief factor in bringing about our present financial plight, nevertheless the War expenditure is a waning item. Every year it gets less. It will shortly disappear, except in the form of pensions, and in the form of pensions it will disappear within the lifetime of this generation. But there is an ever waxing and increasing expenditure which clutches upon every bit of taxation which might be remitted, which never rests until it has added to the burdens of the country, and that is the expenditure upon social services. If hon. Members opposite want to reduce taxation, it is there that they will look for savings, and I see no indication on their part so far to act upon what is an obvious axiom.
Then it is suggested that a reduction in the Income Tax is of assistance to the rich—if there be any rich left—and not a help to the poor. If the 97½ per cent, of the 20,000,000 of wage-earners in this country be considered for the moment to be the comparatively poor, all I can say is that that 97½ per cent, of the wage-earners of this country are benefited far,
far more by a reduction of 1s. in the Income Tax than is the actual payer of that impost. The Income Tax payer— there are 2¼ million Income Tax payers out of all the people of this country, numbering 45,000,000—is bled to death, and it is because he has no savings to invest, and because he has no money to use for employment, that unemployment is rampant amongst us. I see the hon. Member for Bodmin (Mr. Foot) who has lately joined us. I think I detect upon his features a smile of incredulity at my statement. When the hon. Gentleman has been here as long as I have, in spite of the creed with which he starts, I think he will come to the same belief, the obvious truth to which I have now ventured to give expression. He represents an agricultural industry. There is no one representing an industrial constituency who can possibly doubt the truth of what I say. The manufacturer is bled white. He has not money to renew his machinery, or re-convert it after the War. None of the class which can put their investments into businesses in the country have any money left to invest. With an Income Tax of 6s., and a Super-tax running up possibly to 5s., no one has any money to invest.
The consequence is that unemployment is rampant; misery is rife and increasing amongst us. I welcome this 1s. reduction with all my heart, not only for what it does, not chiefly for the rich, but for the sake of the wage earners of this country, and because it is an earnest of further reductions which I feel sure my right hon. Friend contemplates. It is a proof, if proof were needed—and I am sure it is not—that he does not accept that poisonous fallacy, that shallow folly and falsest doctrine, that by making the rich poor you can do anything but make the poor poorer. One thing I regret in the Budget, I am sorry that justice has not been done to a taxpayer whom I must apologise for mentioning to hon. Gentlemen opposite—I refer to the Super-tax payer. He really is almost the keystone of the financial arch. He is the man who had the money to make investments and keep industries going, but nowadays it has been taken from him. First of all it went in Death Duties, which were most valuable to the State—that is the money that paid them. That money it was that kept the wheels of industry going. Next to the money of the Super-
tax payer, who put his savings into business, comes the money of the Income Tax payer. He has some relief, but he is still treated as if he were idle rich and should be deprived of his last shilling. He and the Super-tax payer were the very keystone of the financial arch. While they are bled and treated as fair game for plunder, industry will never lift up its drooping head, and we shall never revert to that prosperity that we had before taxation was of a confiscatory character and was then spread fairly, or with moderate fairness, over the 45,000.000 inhabitants of this country. I am not going to apologise for what I am saying, for I am only stating a few very simple, evident, economical, and financial facts, and I believe a knowledge of them, in spite of everything said and done by the misleaders, called leaders opposite, is spreading among the intelligent and patriotic workmen of our country.
On the point of the reduction of expenditure in the Departments, I wonder whether hon. Members—I am sure they did, most of them—read a very interesting letter by Sir Fleetwood Wilson, who has had a long experience in the public service. He pointed out the other day in that letter to the papers, and we know it is true—I spent a quarter of a century in the public service, and therefore ought to know something about it—Sir Fleet-wood Wilson says:
So long as you have offices, rooms, chairs and desks, you will never lack officials to occupy them.
You require far more drastic treatment of this problem than has ever been applied to it. If I may venture to give a personal experience, may I say that during the War I had charge of a Department, with about 525 subordinates, mostly women, who worked exceedingly well. It went out that this Department was suitable for abolition, but my subordinates showed the most excellent reasons why this should not be so, and these reasons I was totally unable to answer. I remember one clerk who had a talent for research pointing out that in the United States at the present moment there are clerks liquidating the claims of the civil war. I arrived at the conclusion that absolutely the only thing to be done in such a matter as this was to fix a date on which the Department came to an end, and after that let the business somehow settle itself, as it would do. Although I
cannot compare my small experience with that of the great statesmen on the Treasury Bench, I do recommend that method as being the proper spirit in which the Geddes Report should be read and its recommendations carried out. The expenditure of the millions involved here does not seem to me to be necessary. If you had less offices and less officials, I honestly believe—and I am anxious to speak impartially, being a bit of an official myself—the Chancellor would get his business brought to him just the same as now, and he would earn the gratitude of innumerable taxpayers of the country. I trust also he will abolish the Corporation Profits Tax. It is perhaps absurd to mention this and suggest further reductions at this moment. Nevertheless, I do venture to urge upon the right hon. Gentleman that this is a tax upon investing enterprise, as probably all taxes are—but the peculiarity of this tax is that it hits that most valuable individual, the ordinary shareholder. He is a man who ought to be comforted and stayed. Anything that discourages him discourages the general provision of capital, and is, therefore, to be deprecated.
May I for a moment refer to the taxation on beer. I have said that it would be very difficult for the Chancellor to make any sensible reduction in a tax which is so overwhelming in its amount as the tax upon beer. Nevertheless it is an exceedingly serious matter, and conducive to a general, and, I think, a most justifiable discontent. For beer which you could get for an average of 2½d. per pint before the War, you now pay an average of 7d., rising, in the case of the tied houses of the Government at Carlisle, to something like 9d. per pint. The Government ought not to be in the beer business. I have always said they should give it up. The Home Secretary has fallen far short of the ideal that I have laid before him and the House in that respect, and he has declared the intention of the Government shortly to acquire further houses and to go deeper into the slough of the beer trade at Carlisle. Those who charge it against the brewers that they are profiteers forget that malt has gone up 82 per cent., hops 250 per cent., and other materials concerned in the production of beer something like 70 per cent., besides the increased cost of labour. With these
facts before the House it must be remembered it is not the brewer who is to blame for the high price of beer, nor is it altogether the Government. It is the terribly heavy tax upon the top of all that has combined to raise the price of that staple and most wholesome drink of this country in a manner which I regard as most unfortunate. I hope my right hon. Friend will take this into account. I trust we shall receive from him, as an instalment of reform, that he will persuade his brother Minister, the Home Secretary, to get out of the business of Carlisle. The Chancellor of the Exchequer has displayed courage in the way he has dealt with this subject, but I would like him to go a little further, and fund the war pensions. Why not? It is the expense of the War, and it would be far easier for this generation if the charge was spread over a period of 50 years. It would be a perfectly fair and a most reasonable adjustment to put upon the next generation a fair proportion of the cost of the War, and I press that point upon the attention of my right hon. Friend. I thank the Chancellor of the Exchequer for what he has done in regard to postal charges, and I think both he and the Postmaster-General should be thanked for this concession.
There is one other subject I wish to refer to, and it is the Entertainments Duty. The right hon. Gentleman the Member for Gorbals (Mr. G. Barnes) said he had no sympathy with the plea for the reduction of the entertainments tax, but that is not quite conclusive. He might not sympathise, but he should remember that these entertainments are the amusement and the play of the poor. A tax of this discription has to be spread over very small entertainment charges, and that is on a totally different footing to a tax on a 15s. stall or a£2 2s. box. It is a totally different proposition, and it presents a difficulty which is very hard to face. I think the cinema proprietors would be quite willing to pass this tax on, but the difficulty is that they cannot. It is like taking a 1d. per 1b. off tea because you cannot spread it over the smaller packets. In the same way you cannot spread the Entertainments Tax over the small charges made for these cheap entertain-
ments. Therefore I urge the Chancellor of the Exchequer to take into account the fact that this tax is not upon the same footing as other taxes, and it cannot be passed on, and I hope he will take that fact into consideration when he prepares the next Budget.
The only other word I wish to say is this: On innumerable occasions in this House we have had before us the cases of those who are, afflicted, the halt, the lame and the blind, the consumptive, and everybody suffering from disease and trouble, and we are all very sorry for them. The House always takes a sympathetic interest in such cases, and they have received all the attention and the help that it is possible to give them. My last plea is for the man with two legs and two arms, who works, and who is healthy, and who has everything on his back. He is the man who has no comforter, and who is reduced to poverty in order to provide these things for everybody else. My plea is for him, and on his behalf I thank the Chancellor of the Exchequer for the reductions he has been able to make in taxation, and I urge the right hon. Gentleman to continue those efforts and to make even more next year, when I hope I shall see him in his present position.

Mr. HILTON YOUNG: It is not my intention to intervene for more than a very brief time. It is far from my intention to try to reply to this Debate at large. Mine is the humbler task of seeking to give such information as I can to the best of my ability in reply to the various questions that have been asked the Treasury in the course of the Debate, and also to clear away one or two misconceptions that may have arisen as to the nature of the Budget proposals. The hon. Baronet the Member for East Nottingham (Sir J. D. Recs) has covered the whole range of the Budget, and has regaled the Committee with his accustomed humour. The point on which he was most forceful was in the region of the Beer Duty and, it must be said, that the source from which so much revenue was raised in the course of last year has proved, whatever may be said of other sources, undefeated. The Estimate put before the House last year was for a eon-sumption of 4,000,000 barrels. In spite of the prolonged bad condition throughout the year, the output was a little under I 24.7 million barrels more than the Esti-
mate and the actual consumption was only a little below 24.4 million barrels, so that, in spite of the shocks of adversity, this admirable contributor to the revenue has always maintained its own. Under these circumstances, I am sure the Committee will not think we are overestimating our prospects for the ensuing year when we reduce the consumption below that of last year to the smaller figure of 20,000,000 barrels. I think our experience in the past year shows we may rely on it that that estimate will be realised and we may continue to depend on this excellent source of revenue.
Questions have been asked by several lion. Members, and very naturally so, as to the effect of the proposed reduction of the basic rate of Income Tax by 1s. on both the lower and higher ranges of the tax—a question put last, I think, by the hon. Member for Farnham (Mr. A. M. Samuel). When the basic rate is reduced by 1s., it does not, unfortunately, follow that the Income Tax of all of us will be reduced by 1s. in the£. That would be too good to be true. I think the simplest way of expressing the general effect of reducing the basic rate of Income Tax by 1s. is by saying that it results in the reduction of all our Income Taxes by one-sixth. If our assessments are on the same basis as in the preceding year, our Income Tax is reduced by one-sixth. That is the general effect of the reduction throughout the range of the tax In order to make this effect more clear to hon. Members, I think it would be useful that a table of effective rates at the new basic rates should be prepared, and should be available for hon. Members, and that will be done in the course of a very short time.
A question has been raised by one or two hon. Members, and in particular by the hon. and learned Member for Cambridge University (Mr. Rawlinson) and by the hon. and gallant Member for Bury St. Edmunds (Lieut.-Colonel Guinness), who pressed with great force and most persuasive reasoning the hardship inflicted by the Corporation Profits Tax upon various corporations instituted for philanthropic or other beneficial purposes, not for the purpose of making profits. The Committee will not, I know, expect any definite pronouncement from me upon that topic on the spur of the moment and without consideration, but
I have had an opportunity of considering this matter and of bringing it to the attention of the Chancellor of the Exchequer, and I think I can say at the present time that sympathetic consideration will be given to it for the reasons which have been advanced. It will occur to hon. Members who approach this topic that, primô facie, one distinction suggests itself as a means by which companies which it is thus desired to relieve may be distinguished from other companies, namely, that it appears, at any rate on first consideration, that the class of companies which it is desired to relieve is that class which is exempted from the use of the word "limited" in their title, and I would only suggest that that may prove to be the region within which any relief which it is desired to give might be extended.
A question was asked by the hon. Member for Stirlingshire (Sir H. Hope) as to the precise effect of the proposed relief to farmers in their assessments under Schedule B. While it is proposed to grant relief by reducing the artificial valuation of profits on the annual value, it is no part of that proposal to withdraw from the farmer the option to come in, if he pleases, under Schedule D. So far from that being the case, I think it will be agreed, by all those who have the fair taxation of agricultural interests at heart, that the direction of reform on this region should rather be by way of abolishing these artificial assessments, and of including all agricultural interests under the practical and reasonable assessment of Schedule D. That was the recommendation of the Royal Commission. The difficulty that lies in the way, of course, is the difficulty experienced by small farmers in grappling with the intricacies of accounts; but, on the other hand, it is undoubtedly in the interest of farmers themselves that they should be encouraged to keep accounts, and therefore I say that, if we are to look in the future for any development in this direction, it would rather be by way of extending Schedule D as applied to agricultural interests, and not by any means limiting it.
There are two points which I can mention which cover a rather more general and possibly a little more controversial field. The provision for Supplementary Estimates has been, I might almost say, strongly criticised by the
right hon. Gentleman the Member for Paisley (Mr. Asquith) as inadequate. I will certainly no more than any other reasonable man, stand at this box and say it is absolutely certain that any supplementary provision that we fix now should under no conceivable circumstances be exceeded, but I am prepared to say that owing to the changing circumstances of the times, owing to circumstances which it is possible to specify, a greatly reduced provision of Supplementary Estimates this year is by no means unreasonable. In the first place the great size of the Supplementary Estimates in the year's closely succeeding the War was due principally to the difficulty of estimating under circumstances which were novel and of which there was no previous experience. In the course of time we have gained experience and we can estimate more closely. In the second place, the reason why the Supplementaries were so big in the post-War years was that financial control had been relaxed during the War. We financed on Votes by Credit. It is only by degrees that we have got back from loose finance by Votes of Credit to more accurate finance by Estimates, and we are still enjoying the benefits of that increasing financial control. That is another reason why it may be expected that Supplementary Estimates will be less.
Finally, disturbed as the circumstances of the world still are, great and often calamitous as the unforeseen and unforseeable circumstances still are, which may occur to upset the Budget of the year, still year by year the extreme instability of War conditions is lessoned. Less catastrophic contingencies we may reasonably hope to be expected in the course of the years as they pass, an influence which, of course, tends towards the certainty of the Budget Estimate, and a reduction of the scale of supplementaries. The Committee will no doubt remember that it is an old and almost unbroken procedure that the bulk of the Resolutions, and particularly all the essential Resolutions, should be obtained at the end of the first day, in order to prevent confusion in the trading system of the country and in order that you may begin sharply the new taxes and the changes in the old taxes. The last
Resolution, a sweeping Resolution, that it is expedient to amend the law, is kept till the second day. That Resolution is so wide in its phrasing that it allows a general discussion of all subjects in the course of to-morrow's Debate. I would therefore represent to the Committee that it is desirable that we should get these Resolutions to-night at a reasonable hour. There will be full opportunity to-morrow to continue the discussion, and each Resolution can be discussed in detail on Report, and, of course, the substance of all that we are doing is discussed again on the Finance Bill.

Sir CHARLES OMAN: I do not propose to address the Committee on generalities or epigrams, or in wonderful mixed metaphor such as that which foil from the hon. Member for East Nottingham (Sir J. D. Rees), who talked about bleeding corner stones to death—a phrase which perhaps will be remembered in the archives of this honourable House. I have only one small point to bring before the Chancellor of the Exchequer and that is to appeal to him to see whether he could not spend a very small sum of money on a matter upon which he did not touch, namely, the reform of the British coinage. Three years ago his predecessor debased the coinage to 50 per cent, purity from 95 per cent, purity. That was done because silver was then 88d. to the ounce. It has now gone down to 34d. to the ounce, and has remained stationary for more than two years. The great outflow of coinage which was going on has stopped. Now that the demand, except for colonial purposes, is very largely at a standstill, could not the right hon. Gentleman do something towards resuming the old purity of the standard and prevent us from receiving those horrible pieces of coinage of which I have sent the right hon. Gentleman a collection? Some of the collection had turned brown, some green, and some black. The King's head had flaked off, while the rim had taken its departure from another set. These collections were a disgrace to any coinage. Since the time of Henry I the British coinage never presented such an unlovely appearance. It is entirely caused by the bad mixture of silver and nickel alloy. With silver at 34d. to the ounce, and only small coinage going on, it would be quite possible to resume, if not our complete ancient standard, at any rate, a standard
more approaching that which our Colonies have recently adopted. The South African coinage is now 80 per cent, pure, and the Canadian coinage 90 per cent. pure. The amount of silver which is being issued at present is comparatively small, and it is for the sake of the old historical British coinage that I make this appeal.

Sir COURTENAY WARNER: I do not wish to detain the Committee, but only to find fault with the statement that it is a custom to pass these Resolutions at once. It is only a custom in this way, that usually they come into force at once. This Resolution is to come into force in 15 days; therefore, I do not know that it applies to to-night.

Question put, and agreed to.

COCOA.

Resolved,
That, in lieu of the existing Customs Duties on cocoa, there shall, on and after the fifteenth day of May, nineteen hundred and twenty two, he charged the following reduced duties, that is to say: —

£
s.
d.


Cocoa, the cwt.
1
8
0


Cocoa (husks and shells), the cwt.
0
4
0


Cocoa-butter, the lb.
0
0
3

Provided that as respects any duty charged on manufactured or prepared goods under Section seven of the Finance Act, 1901. the reduction shall not take effect until the first day of Tidy, nineteen hundred and twenty-two.

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

COFFEE, CHICORY, AKD COFFEE SUBSTITUTES.

Resolved,
That, there shall, on and after the fifteenth day of May, nineteen hundred and twenty-two—

(a) In lieu of the existing Customs duties on coffee and chicory, be charged the following reduced duties, that is to say: —



£
s.
d.


Coffee (not kiln-dried, roasted or ground), the cwt.
1
8
0


Coffee (kiln - dried, roasted, or ground), the lb.
0
0
4


Chicory (raw or kiln-dried), the cwt.
1
6
6


Chicory (roasted or ground), the lb.
0
0
4

(b) In lieu of the existing Excise Duty on chicory, be charged the following reduced duty, that is to say: —



£
s.
d.


Chicory (raw or kilndried), the cwt.
1
1
1


and so in proportion for any less quantity.

(c) In lieu of the existing Excise Duty on coffee substitutes, be charged the following reduced duty, that is to say:—



£
s.
d.


For every quarter of a pound of a coffee substitute
0
0
1

(d) Be substituted for the rates of draw back on coffee and chicory and mixtures of coffee and chicory authorised by Section twenty-two of the Finance Act, 1916, the following reduced rates, that is to say: —



£
s.
d.


Coffee, for every 100 lbs.
1
8
0


Chicory, for every 100 lbs.
1
2
6


Mixtures of coffee and chicory, for every 100 lbs.
1
2
6

Provided that the reduction shall not have effect in relation to any goods as respects which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty was paid at the rates in force before the fifteenth day of May, nineteen hundred and twenty-two.

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

CONTINUATION OF DUTIES (CUSTOMS).

Resolved,
That the duties of Customs specified in the first column of the following table, which were imposed by Part I of the Finance (No. 2) Act, 1915, and continued by Section one of the Finance Act, 1921, in the case of the duties on dried fruits until the first day of August, nineteen hundred and twenty-two, and in the case of the new import duties until the first day of May, nineteen hundred and twenty-two, shall continue to be charged as from those respective dates until the dates specified as regards the said duties respectively in the third column of the said table: —

Duty.
Section of Finance (No. 2) Act, 1916.
Date to which Duty continued.


Additional duties on dried fruit.
8
1st August, 1923.


New import duties
12
1st May, 1923.

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

CONTINUATION OF ADDITIONAL MEDICINE DUTIES (EXCISE).

Resolved,
That the additional duties of Excise upon medicines imposed by Section eleven of the Finance (No. 2) Act, 1915, and continued by Section two of the Finance Act, 1921, until the first day of August, nineteen hundred and twenty-two, shall continue to be charged as from that date until the first day of August, nineteen hundred and twenty-three.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

ENTERTAINMENTS DUTY.

Resolved,
That the duty charged on payments for admission to entertainments shall extend to—

(a) payments for admission to an entertainment, which are made to some person other than the proprietor of the entertainment; and
(b) payments of rent made in respect of an interest in any premises which is primarily acquired for the purpose of securing admission to an entertainment.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

INCOME TAX.

CHARGE OF TAX.

Resolved,
That—

(a) Income Tax shall be charged for the year beginning the sixth day of April, nineteen hundred and twenty-two, at the rate of five shillings in the pound, and the same Super-tax shall be charged for that year as was charged for the year beginning the sixth day of April, nineteen hundred and twenty-one; and
(b) the like provisions shall have effect with respect to the Income Tax and Super-tax so charged and the annual value of property as had effect with respect thereto for the year beginning the sixth day of April, nineteen hundred and twenty-one.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

COMPUTATION OF INCOME CHARGEABLE UNDER CASE III OF SCHEDULE D.

Resolved,
That Income Tax chargeable under Case III of Schedule D shall be computed, in the case of the year of assessment in which the profits or income first arise, on the full
amount of the profits or income arising within that year, and in the case of subsequent years of assessment, on the full amount of the profits or income arising within the year preceding the year of assessment, or if the profits or income first arose on a day in the year preceding the year of assessment other than the sixth day of April, on the profits or income arising within the year of assessment.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

INCOME TAX ON EMPLOYMENTS AND PENSIONS TO BE CHARGEABLE UNDER SCHEDULE E.

Resolved,
That—

(a) Such profits or gains arising or accruing from an office, employment or pension as are now chargeable to Income Tax under Schedule D (other than profits or gains chargeable under Case V of Schedule D, or under Rule 7 of the Miscellaneous Rules applicable to Schedule D) shall be chargeable to tax under Schedule E;
(b) Perquisites shall, instead of being estimated in the manner provided by Rule 4 of the Rules applicable to Schedule E, be estimated in the same manner as other profits chargeable under that Schedule;
(c) Paragraph (a) of this Resolution shall apply for the purpose of any assessment which is made or becomes final and conclusive after the date hereof in respect of any employment under any public department, or under any company, society, body of persons, or other employer mentioned in Rule 6 of the Rules applicable to Schedule E, notwithstanding that the profits or gains to which the assessment relates were, at the date when they arose, chargeable under Schedule D.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

INCOME UNDER REVOCABLE AND CERTAIN OTHER DISPOSITIONS TO BE TREATED AS INCOME OF DISPONOR.

Resolved,
That any income—

(a) of which any person is able, or has at any time since the fifth day of April, nineteen hundred and twenty-two been able, by the exercise of any power of appointment, power of revocation, or otherwise howsoever, to obtain for himself the beneficial enjoyment; or
(b) which by virtue or in consequence of any disposition whatsoever made by any person after the first day of May,
1129
nineteen hundred and twenty-two (other than a disposition made for a valuable and sufficient consideration) is payable to or applicable for the benefit of any other person for any period not exceeding six years; or
(c) which by virtue or in consequence of any disposition whatsoever made by any person is payable to or applicable for the benefit of an unmarried infant child (including a step-child or an illegitimate child) of that person for some period less than the life of the child;
shall for the purposes of the enactments relating to Income Tax (including Super-tax) be deemed to be the income of the person who is able to obtain the beneficial enjoyment thereof, or by whom the disposition was made, as the case may be, and not to be for those purposes the income of any other person, and any person who, under paragraph (b) or paragraph (c) aforesaid becomes liable to pay any additional amount by way of Income Tax or Super-tax on any income shall be entitled to recover from the person entitled, whether as trustee or otherwise, to receive that income, the additional amount so paid.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.

SUPER-TAX ON UNDISTRIBUTED INCOME OF CERTAIN COMPANIES.

Motion made, and Question proposed,
That where a reasonable proportion of the actual income from all sources for any period ending on any date subsequent to the fifth day of April, nineteen hundred and twenty-one, of any company, which is of a private character, is not distributed to its members in such manner as to render the amount distributed liable to be included in the statements to be made by the members of the company of their total income for the purposes of super-tax, that actual income shall be treated as having been apportioned among the members of the company in accordance with their respective interests in the company and the part so apportioned to any member shall, for the purposes of Super-tax, be deemed to represent his income from his interest in the company for the said period and shall for those purposes be deemed to be the highest part of his income, and any Super-tax chargeable by virtue of this Resolution shall be assessed in the name of the company on the member of the company concerned, and shall, unless paid by that member, be payable by the company.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Sir W. JOYNSON-HICKS: Before this very important Resolution, which raises quite a new idea in taxation, is carried,
may I ask my right hon. Friend whether he will be prepared to-morrow to give a fuller explanation of the reason for it? I understand it is to deal with one-man businesses, and the right hon. Gentleman did say something of that kind in his speech. It is an entirely new point in taxation, the assessment of a man on income he has not received. If the statutory Resolution goes through tonight, we shall have passed it, but we ought to have proper information upon it before we carry it.

Sir R. HORNE: I shall be very glad indeed to make a statement upon this Resolution to-morrow if my hon. Friend will not oppose its being passed to-night.

Sir W. JOYNSON-HICKS: No, not if we have an explanation to-morrow.

Question put, and agreed to.

INTEREST ON ARREARS OF EXCESS PROFITS DUTY.

Motion made, and Question proposed,
That—

(a) Interest at the rate of 5 per cent, per annum without deduction for Income Tax shall be charged on Excess Profits Duty and Munitions Exchequer Payments, in the case of any such duty or payments which became payable on or before the first day of January, nineteen hundred and twenty-two, as from that date, and in the case of any such duty or payments becoming payable after that date, as from the expiration of two months from the date on which the duty or payments was or were assessed; and
(b) In computing profits or income for the purposes of assessment to Income Tax, no deduction shall be allowed in respect of interest so payable."

Sir F. BANBURY: This is rather a long Resolution, but I gather that it means that where a person who owes money under the Excess Profit Tax does not pay he shall be charged 5 per cent, interest until he does pay.

Sir R. HORNE: It means a good deal more than that. The payment may be spread over five years, and it allows great latitude to a person who is a debtor. In consideration of the privilege, he is to be charged 5 per cent, during the period in which he is in default.

Mr. KILEY: Does that apply only to Excess Profits Duty?

Sir R. HORNE: Only to Excess Profits Duty, of course.

Mr. MACQUISTEN: Does not the right hon. Gentleman think that in view of the fall in the bank rate 5 per cent, is a rather usurous rate of interest to charge?

Sir R. HORNE: No.

The DEPUTY-CHAIRMAN: We can discuss that to-morrow.

Question put, and agreed to.

AMENDMENT OF LAW.

Motion made, and Question proposed,
That it is expedient to amend the law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.— [Colonel Leslie Wilson.]

Resolutions to be reported To-morrow.

Committee report Progress; to sit again To-morrow.

BREAD ACTS AMENDMENT BILL.

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."—[Mr. Inskip.]

Mr. HOGGE: The hon. and learned Member has stated that he begs to move this Motion. I thought that when a private Member introduced a Bill he should explain its purport and its details.

Mr. INSKIP: I informed the House of the full facts of the Bill when I introduced it, and the First Reading was passed without a Division and without any objection.

Mr. HOGGE: Very frequently a Member explains what a Bill is about on its First Reading, but the opportunity for discussing the Bill is usually taken on the Second Reading. I do not know what the Bill is about, but it seems to me that my hon. and learned Friend is moving the Second Reading a few minutes from the time in order to get it through without any explanation. I have an objection to supporting a Bill in these circumstances. I have no objection to supporting a Bill if it is a good one, but I am not prepared to support this or any other private Member's Bill unless the hon. Member in charge of it is prepared to take the opportunity of explaining it. After all it must be a good or a bad Bill. [HON. MEMBEBB: "No!"] Some hon. Members appear to think there is a middle course, and I suppose if there is that is the course which the Coalition Government would follow. But even if there are three courses, the hon. and learned member has not adopted any one of them. What are the Bread Acts? I have heard of the Bread Riots. I have no idea at all as to what the Bill refers to, and before a private Member asks the House to give a Bill a Second Reading he should explain its provisions.

It being Eleven of the Clock, the Debate stood adjourned.

Debate to be resumed upon Thursday next.

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Colonel Leslie Wilson.]

Adjourned accordingly at Two minutes after Eleven o'Clock.